How does leverage work in gold trading?

Leverage in gold trading means you control a larger position with a smaller amount of capital. For example, with 1:100 leverage, a $1,000 deposit lets you control $100,000 worth of gold. In XAUUSD trading, one standard lot (100 ounces) at $4,000 per ounce requires $400,000 in notional value. With 1:100 leverage, you need $4,000 in margin. The catch? Leverage amplifies both profits AND losses. A 1% move against you with 1:100 leverage means a 100% loss of your margin. For gold, which regularly moves 1-2% per day, high leverage is extremely dangerous. My rule: never use more than 1:30 leverage for gold. It limits your position size but keeps you in the game long enough to let your analysis play out. Brokers offering 1:500 or 1:1000 are not doing you a favor — they're preying on inexperience.