Gold vs Euro

Precious Metals


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Euro VS Gold

XAUEUR is a pair that reflects the current value of 1 troy ounce of gold in euro. The euro serves as one of the most significant fiat currency alternatives to the U.S. dollar while gold is considered a store of value and a hedge against inflation and geopolitical unrest. As both assets usually have a negative correlation to the U.S. dollar, there is often a positive link between them. The relationship though is far from absolute due to gold being an alternative not only against the U.S. dollar but also against the current fiat currency monetary system. Consequently, oftentimes both the euro and the dollar could record losses against gold.


The euro is the official currency of the Eurozone, a monetary union consisting of 23 European Union countries. It was originally used as an accounting currency in 1999 and it was established as the official currency of the European Union in 2002 when physical coins and banknotes entered into circulation. It is the second most traded currency in the world, and it serves as an international reserve currency. Monetary policy decisions by the ECB, the Eurozone GDP, the balance of payments, CPI, and the political situation of the member countries comprise some of the factors that can affect the price of the euro.


Gold is considered a store of value, a hedge against inflation, and a “safe haven” instrument. Investors usually turn to it during social and political instability and economic crises. These negative developments usually, but not always, put upward pressure on the price of precious metals.

From January to May 2020, a period during which the Covid-19 pandemic caused market volatility, gold increased more than 13%. The rise is attributed to investors moving money from currency investments to alternative investments such as gold.

What Moves the Price of Gold

Gold is categorized as a commodity, but it generally behaves more like a currency. The precious metal is weakly correlated to other commodities, is not as extensively used in the metals industry, but unlike currencies, it is not linked to a specific country. Gold is a global monetary asset reflecting global sentiment. The yellow metal price is heavily influenced by US macroeconomic conditions which include the strength of the U.S. dollar, interest rates, and risk aversion levels.

Other factors which affect the asset’s price include government asset requirements, demand levels in the luxury goods industry, its use in technology and industrial products, and gold mining production volumes. The top five producing countries include China, Russia, Australia, the U.S., and Canada. The supply of “newly” unearthed gold can affect the spot price of gold, but it is mostly the reserves of gold above ground and their allocation that can influence the asset’s price more than the production itself.

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