If you are new to gold trading, the first thing you’ll notice on your MetaTrader 5 (MT5) platform is that gold is priced in “ounces.” However, if you walk into a jewelry store, they talk about “grams” and “karats.”
Understanding how gold is measured is the difference between making a calculated trade and making a costly mistake. In this guide, we break down everything a beginner needs to know about gold units, purity, and calculations.
1. The Golden Rule: Troy Ounce vs. Standard Ounce
This is the most important concept in gold trading. In everyday life (like at the grocery store), we use the Avoirdupois ounce. In the financial markets, we use the Troy Ounce (oz t).
- 1 Standard Ounce ≈ 28.35 grams
- 1 Troy Ounce ≈ 31.103 grams
Trader’s Note: A troy ounce is about 10% heavier than a standard ounce. If you see gold priced at $2,500 on your screen, that price is for exactly 31.103 grams of pure gold.
2. Gold Units at a Glance
Depending on where you live or what platform you use, you may encounter different units. Use this table as your “cheat sheet”:
| Unit | Conversion to Grams | Note |
| 1 Troy Ounce (ozt) | 31.103g | The global standard for XAUUSD trading. |
| 1 Gram (g) | 1g | Common for small physical bars and jewelry. |
| 1 Kilogram (kg) | 1,000g (32.15 ozt) | The unit for “Good Delivery” central bank bars. |
| 1 Tola | 11.66g | Common in India, Pakistan, and the Middle East. |
3. Understanding Purity: Karats vs. Fineness
In trading, price always refers to pure gold. However, gold is often mixed with other metals for durability.
The Karat System
The Karat (K) system measures purity in parts of 24.
- 24K Gold: 99.9% pure (Investment grade)
- 22K Gold: 91.6% pure (Common in coins like the Krugerrand)
- 18K Gold: 75% pure (Common in high-end jewelry)
Millesimal Fineness
Traders and refineries prefer Fineness, which is expressed in parts per 1,000.
- 999.9: “Four Nines” fine (Purest investment gold)
- 916: Equivalent to 22K gold.
- 750: Equivalent to 18K gold.
4. How to Calculate Gold Value per Gram
When you see the “Spot Price” on your MT5 terminal (XAUUSD), it represents the price of one troy ounce. To find the price per gram, use this simple formula:
$$\text{Price per Gram} = \frac{\text{Current Spot Price}}{31.103}$$
Example:
If the XAUUSD price is $2,500:
$ $2,500 \div 31.103 = \mathbf{$80.38 \text{ per gram}} $
5. Trading Lots on MT4/MT5
When you enter a trade, you don’t type in “10 grams.” You type in Lots. For most brokers:
- 1.0 Standard Lot: 100 Troy Ounces
- 0.10 Mini Lot: 10 Troy Ounces
- 0.01 Micro Lot: 1 Troy Ounce
Conclusion
Mastering gold measurement is your first step toward becoming a professional XAUUSD trader. Always remember that the market speaks in troy ounces, but your local jeweler speaks in grams and karats. Knowing the math behind these units ensures you always know exactly what your position is worth.