What is a gold candlestick chart?
When you open a world gold price chart, you may see a sequence of green and red columns. These are called price candlesticks. Each candle summarizes how the gold price moved during a particular period, such as 1 minute, 15 minutes, 1 hour or 1 day.
A candlestick chart shows where the price started and ended, as well as the highest and lowest levels reached during the selected period. This article only explains how to read chart data. It does not forecast prices or make trading recommendations.
What information does a candlestick show?
Each candlestick contains four prices, commonly abbreviated as OHLC:
- Open: the price at the start of the candle’s period.
- High: the highest price recorded during that period.
- Low: the lowest price recorded during that period.
- Close: the price at the end of the candle’s period.
| Component | Illustrative price |
|---|---|
| Open | USD 3,350/ounce |
| High | USD 3,372/ounce |
| Low | USD 3,342/ounce |
| Close | USD 3,365/ounce |
How to interpret the example
During that hour, the price started at USD 3,350 per ounce, fell as low as USD 3,342, rose as high as USD 3,372 and ended at USD 3,365 per ounce.
These numbers are only examples used to explain how to read a chart; they are not the current gold price.
What is the candle body?
The candle body is the rectangular area between the open and close prices.
- If the close is higher than the open, it is usually an up candle.
- If the close is lower than the open, it is usually a down candle.
Candle color and body length
Many charts display up candles in green and down candles in red, but these colors can be changed in the chart settings. The reliable method is to hover over the candle and compare O with C, rather than relying on color alone.
A long body means the open and close were relatively far apart during that timeframe. A short body means the two prices were relatively close. This only describes how far the price moved during a period; it does not automatically indicate whether the next price move will be up or down.
What are candlestick wicks?
The thin lines above and below the body are commonly called wicks or shadows.
- The top of the upper wick marks the highest price.
- The bottom of the lower wick marks the lowest price.
How to read the wicks
A long upper wick means the price traded significantly above the open or close before moving back down before the candle ended. A long lower wick means the price traded significantly lower before recovering part of that move by the close.
A candle with long wicks shows that the period’s total trading range was larger than the difference between its open and close. However, a single candlestick should not be used on its own to determine a market trend.
Candlestick chart timeframes
The timeframe tells you how much time each candle represents:
| Timeframe | Each candlestick represents |
|---|---|
| 1 minute | Price movement over 1 minute |
| 15 minutes | Price movement over 15 minutes |
| 1 hour | Price movement over 1 hour |
| 4 hours | Price movement over 4 hours |
| 1 day | Price movement over 1 day |
| 1 week | Price movement over 1 week |
Why does the timeframe matter?
A 15-minute chart and a daily chart can create very different impressions at the same point in time. Short-term charts show many small fluctuations, while daily or weekly charts give a longer-term view.
For example, a red candle on a 15-minute chart only means that its close was lower than its open during those 15 minutes. It does not mean that the gold price is necessarily down for the entire day.
How to read a candlestick chart step by step
You can read a chart in the following order:
- Check the asset name: confirm that the chart shows gold, commonly XAU/USD, rather than silver or another instrument.
- Check the unit: international gold prices are commonly expressed in US dollars per troy ounce.
- Select a timeframe: for example, 15 minutes, 1 hour or 1 day.
- Hover over a candle: read its O, H, L and C values.
- Inspect the body: compare the open with the close.
- Inspect the wicks: identify the high, low and total price range.
- Read several candles together: do not draw a conclusion from a single candle.
- Check the timezone and market status: the start and end of each candle may depend on the chart timezone and data source.
How is a live candle different from a closed candle?
A candlestick that has not ended can continue to change. Its provisional close, body length, wicks and even its color may change before the timeframe expires.
For example, on a one-hour chart, a candle that begins at 10:00 is only complete at the end of the corresponding period defined by the data source. Until then, Close is only the latest price, not the candle’s final closing price.
When describing historical data, it is therefore important to distinguish between a closed candle and one that is still forming.
Common misunderstandings
Does a green candle mean the price will definitely keep rising?
No. A green candle only means its close was higher than its open during the exact period represented by that candle. The next candle may behave differently.
Does a red candle mean the current price is below yesterday’s price?
Not necessarily. It depends on the timeframe. A five-minute red candle only compares the open and close during those five minutes.
Is a candlestick chart the same as a gold shop’s buying and selling prices?
No. An XAU/USD chart generally shows the international gold price according to the chart’s data source. Domestic gold bars, plain rings and jewellery may be priced differently because of exchange rates, supply and demand, brand, product type, costs and the buy–sell spread.
Why can two XAU/USD charts show different values?
The charts may use different data providers, reference instruments, timezones or aggregation methods. When comparing them, check that the symbol, source and timeframe all match.
Conclusion
To read a candlestick, remember four values: open, high, low and close. The body shows the distance between the open and close; the wicks show the full range in which the price moved during the period.
Candlestick charts provide a visual way to examine historical price data. A single candle is not a forecast and should not be interpreted as a recommendation to buy or sell.