How I built a gold trading strategy that actually works

In this in-depth article, trading expert Li Xing Gan reveals the gold trading strategy she developed over years of hands-on experience—blending macro insights, price action, and disciplined execution to help traders navigate one of the world’s most dynamic markets.

As a market strategist, I have seen my fair share of charts, but nothing matches gold. It is a pressure gauge for the global mood, reflecting fear, confidence, inflation concerns, and geopolitical tensions all rolled into one. Trading gold requires keeping one eye on the charts and the other on the news cycle. It is where sentiment drives direction, and price action helps fine-tune entries.

In this article, I will walk you through the gold trading strategy I developed through years of trial, error, and refinement. I will share how I analyze trending markets and the technical and fundamental analysis principles I rely on. Whether you are just starting or looking to sharpen your existing approach, I hope this provides a practical and grounded perspective on trading one of the most fascinating assets in the market.

What I learned about how the gold market works

Understanding the fundamentals behind gold’s price movements is crucial, especially how geopolitical risks and trade tensions shape the market. 

The major forces that move gold prices

When President Trump introduced sweeping tariffs, the ripple effects went far beyond trade alone. These moves rattled global market sentiment and sent shockwaves through the markets. Gold, as a traditional safe haven asset, naturally became a go-to commodity during this period of heightened uncertainty.

Alongside shifting market sentiment, central banks, particularly in emerging markets, were also ramping up their gold reserves. With growing concerns over dollar dependency and rising geopolitical fragmentation, gold became a strategic hedge against external shocks. These institutional flows added a powerful undercurrent to gold demand, reinforcing gold’s bullish trend. It was not just retail traders chasing price swings but a broader global repositioning. 

As these geopolitical and economic concerns unfolded, gold’s traditional role as an inflation hedge became even more pronounced amid the ongoing tit-for-tat trade war between the US and China. The escalating trade tensions between these two economic giants could disrupt trade flows and create supply chain bottlenecks, driving up costs across multiple sectors. These developments sparked inflationary fears, boosting gold’s appeal as a reliable store of value. 

Types of gold trading strategies explained

Before I dive deeper into my technical approach, I think it's useful to break down the different types of gold trading strategies that experienced traders typically consider. Each one has its strengths, and the right choice depends largely on your risk appetite, time commitment, and trading psychology.

• Trend following strategy: This strategy involves aligning with the broader market direction. In the gold market, this means identifying strong moves driven by macroeconomic themes or long-term broader market sentiment shifts.
• Swing trading: A mid-term approach that focuses on catching shorter waves within the trend. I often use swing setups when I see a clean structure forming around support and resistance zones.
• Position trading: This is a longer-term strategy. You trade gold based on macro views, central bank policies, or geopolitical shifts, holding positions for weeks or even months.
• Scalping and 5-minute strategies: These are high-frequency approaches that require laser focus and real-time charting. They can be profitable, but are very demanding.
• News trading: Reacting to market-moving events, such as Fed rate decisions or inflation data. As a safe haven asset, gold often reacts instantly to these catalysts.

Understanding these frameworks helped me refine my own gold trading strategy and identify when to shift gears based on market conditions.

Navigating gold’s price action

Now that we better understand the fundamental drivers behind gold's price movements, let's dive into the technical side. While sentiment and news can guide the broader trend, technical analysis gives us the tools to time our entries and exits precisely. 

When analyzing gold, I like to keep it simple and focus on the price action itself. Key support and resistance levels often reveal where the market could react and, more importantly, where liquidity sits. I watch closely for liquidity sweeps around these zones, where the price briefly breaks a key level before reversing course. A clear shift in market structure following the liquidity sweep can signal that the market is ready to move in the opposite direction. These setups help me anticipate the next potential target, often the next support or resistance, providing a clear roadmap for potential entries and exits.

Now that we have covered the logic behind how I read price action, let's look at a few chart examples to see how this plays out in real-time. I will walk you through setups that stood out to me and how I approached them. Simply put, there are two main parts: identifying liquidity sweeps and awaiting shifts in market structure. 

Identifying liquidity sweeps

Let us dive into the XAUUSD daily chart shown above. As you can see, I have marked a few key supports: the “previous month's low” and two instances of the “previous week's low.” Looking back, we can observe a clear example of a liquidity sweep, as prices briefly dipped below the key levels. However, this move was short-lived. Notice how the price quickly reversed and closed back above this key level. The subsequent price action that followed this liquidity sweep is key, if accompanied by a market structure shift. This suggests that the market was gearing up for an upward move.

Awaiting shifts in market structure 

After identifying the liquidity sweep, the next step is to zoom into the lower timeframes and wait for a clear shift in market structure. It might look like a break above a recent high, followed by a higher low—a simple yet powerful concept. 

If we look at the 4-hour chart, we can see that once the price dipped below the previous week's low and grabbed liquidity, it reversed and broke above the last swing high. The swing high is significant because it was the last high that took out the previous week’s low. Breaking above this swing high signals a shift in market structure. That yellow area also becomes a support and potential entry. 

Once we have both the liquidity sweep and market structure shifts in place, the odds lean in favor of a move toward the next key resistance, which in this case is the previous week's high. You might dial into even lower timeframes, depending on your style, to refine your entries and exits. Just keep in mind that tighter stops require careful position management. That might mean taking partial profits at intraday resistance rather than holding for the entire move. It all comes down to finding the balance between precision and risk management.

Tools and indicators for a gold trading strategy

No strategy is complete without the right tools. Over the years, I've trimmed down my toolkit to what I consider essential—indicators and platforms that give me clarity without clutter. The right tools support your edge. For me, they’ve been about enhancing decision-making, not replacing it.

• Price action: This remains my primary lens. Reading candles and patterns around key levels tells me more than any indicator can.
• Moving averages: I use them sparingly, mostly to track broader momentum and trend confirmation.
• Volume analysis: This is highly underrated in gold trading. Spikes in volume, especially around liquidity zones, can signal genuine intent behind a move.
• Fibonacci retracements: These help me project potential pullback zones within trends.
• Relative Strength Index (RSI): I use the RSI indicator to spot potential exhaustion or momentum in a move. It’s particularly useful when gold is pushing into extremes, helping me gauge whether a breakout might be due for a pullback.
• News alerts and economic calendars: Because gold is so sensitive to global headlines, real-time alerts are essential, especially when trading around major events.

How to analyze gold price movements

Analyzing and capturing significant price movements when trading gold is both an art and a science. What I’ve learned is that context is everything. A move that looks like an opportunity for a breakout trading position on a 15-minute chart might be a fakeout when zoomed out.

When I analyze gold, I start with the daily chart to establish context. I mark:

• Major highs and lows (weekly/monthly)
• Recent liquidity sweeps
• Trend direction and potential reversal points.

Then I zoom into the 4-hour or 1-hour timeframe to look for structure shifts and trade setups. I want to see prices that respect previous levels or reject them with conviction.

Price fluctuations in gold often echo macro sentiment, like inflation fears or a shift in bond yields. That’s why I always pair technical setups with a read on the news cycle. Is gold reacting to economic uncertainty or inflation? That context shapes how I interpret each move.

Common questions about gold trading strategy

Psychological traps in gold trading (and how to avoid them)

One of the hardest lessons I learned when trading gold wasn't about charts or news—it was about trading psychology. The gold market can be emotional, and it’s easy to get caught up in the noise. To trade gold well, you need a clear mind and the ability to manage risk with discipline. The technicals matter, but mindset is what keeps you in the action.

Here are a few traps I’ve fallen into, and how I handle them now:

• Chasing the move: Gold often makes aggressive moves on news. Jumping in late usually means you’re buying a top or selling a bottom. I’ve trained myself to wait for structure.
• Overtrading: It’s tempting to trade constantly, especially during volatile sessions. But gold rewards patience. Fewer, high-quality trades have always outperformed for me.
• Fear of missing out (FOMO): This one’s big. When I feel FOMO, I step away and remind myself that trading opportunities come every week.
• Deviating from the plan: I’ve blown trades just by ignoring my own rules. I now write down my strategy and review it before every session.

Key takeaways

1. Understanding the gold market is foundational. A solid gold trading strategy starts with knowing how macro forces—like geopolitical tensions, inflation, and central bank policy—affect the price of gold. Fundamental analysis provides essential context for every trade.
2. Choose the right trading style for your personality. There’s no one-size-fits-all approach. Whether you lean toward swing trading, position trading, or a trend trading strategy, your method should align with your goals and risk tolerance.
3. Price action reveals more than most indicators. Watching how price behaves around support and resistance zones is at the core of my technical trading strategies. Liquidity sweeps and structure shifts often precede meaningful trading opportunities.
4. Use tools that enhance—not replace—your judgment. I rely on a few key technical indicators, such as moving averages, volume, and Fibonacci retracements, but I don’t let them dictate my decisions. They’re tools, not crutches.
5. The 5-minute strategy is powerful but demanding. Short-term scalping can work in gold trading, especially during volatile sessions. This popular gold trading strategy is for those who thrive on speed and structure, paired with a sharp news trading strategy.
6. News moves gold fast. A sudden shift in economic indicators, like inflation data or Fed commentary, can trigger huge spikes in the price of gold. Having a solid news trading strategy helps turn market volatility into opportunity.
7. Don’t ignore the bigger picture. Zooming out and identifying the prevailing trend is a must. A trend following strategy allows you to trade with momentum rather than against it, and that edge adds up over time.
8. Mindset is your secret weapon. Emotional discipline is essential to trading success. If left unchecked, the urge to chase, overtrade, or panic during drawdowns will destroy even the most effective gold trading strategy.
9. Risk management is non-negotiable. Whether you're a beginner or one of the experienced traders, you can’t trade gold successfully without strict position sizing and protective stops. Risk management isn’t a suggestion—it’s survival.
10. Keep learning and refining your edge. To start trading gold seriously, you need to be a student of both technical indicators and fundamental analysis. Markets evolve, and your gold trading approach should too. Every session offers new trading opportunities—if you’re prepared to see them.

Final thoughts on my gold trading strategy

Gold prices tend to be volatile, but the approach to trading gold does not have to be. As we have seen, it all comes down to understanding the macro drivers, identifying where liquidity is likely to sit, and waiting patiently for price action to confirm your bias. This strategy is not about predicting every move but about stacking probabilities in your favor and executing with discipline when the conditions align.

Over the years, I have learned that consistency beats complexity. You do not need dozens of indicators or flashy systems. You just need a clear framework and the patience to let your edge play out. The strategy I shared with you is one I continue to refine because markets evolve, and we must stay sharp in how we adapt.

Whether you are trading gold or any other asset, remember this: let the market show its hand. Liquidity leaves clues, and structure tells the story. Your job is not to chase the market but to wait for the right moment to step in—with clarity, confidence, and control.