Markets and Players — Who Is on the Other Side

Every trade has two sides. When you buy, someone sells to you — and knowing who that someone might be is the beginning of market literacy. The foreign-exchange market alone turns over roughly 7.5 trillion US dollars a day (the Bank for International Settlements' 2022 survey), and gold trades around the clock across London's over-the-counter market, US futures exchanges, and a global retail layer. Almost none of that volume comes from people like you. It comes from institutions with different goals, different time horizons, and different information — and most of them are not trying to predict price at all.

Central banks — hold and manage national reserves (gold prominently among them); they transact for policy reasons, on timescales of years, and do not care about today's chart.
Commercial hedgers — mining companies selling future production, jewellers and manufacturers locking in input costs, airlines hedging fuel. They trade to REMOVE risk, and will happily take the other side of a speculator's position.
Banks and dealers — the plumbing. They quote both sides of the price and earn the spread; their business is flow, not forecasts.
Funds and institutions — pensions, asset managers, hedge funds, algorithmic firms. The largest speculative capital, professional infrastructure, and the competition you meet in every trade.
Retail traders — you. The smallest capital, the fastest execution costs relative to size, and the base-rate statistics from the previous lesson.

One gold trade, four possible counterparties

Step 1 of 4

Possibly nobody outside your broker: many retail trades are internalized — matched against other clients or the broker's own book. Your order may never touch the wider market.

You click BUY on 0.1 lots of XAUUSD. Your broker fills you instantly. Who sold?

Worked example

Reading one day of gold through its players

Asian hours: quieter two-way flow; regional physical demand and position adjustments.
London morning: the OTC heart of the gold market opens; dealer flow and institutional orders deepen the book — spreads typically narrow.
US morning: futures volume arrives; economic data releases can bring the day's fastest movement.
A miner hedges strength into rallies; a fund adds to a macro position; retail traders cluster around round numbers — none of them 'right' or 'wrong', all of them shaping the same chart you read.

Same chart, many motives. Price is the sum of participants who mostly aren't predicting — a reason to be humble about reading intent from candles alone.

Video

Who trades gold — a guided tour

A walkthrough of the participants behind a single trading day in XAUUSD: central banks, hedgers, dealers, funds, and where retail fits.

Video for this lesson has not been produced yet. The charts and walkthroughs above cover the full content — the video, when added, is a companion, not a requirement.

Common mistakes — and how to catch them in yourself

Imagining a single opponent — 'the market makers are hunting me'.
Self-check: When you lose, do you name a villain or a rule you broke? The market is thousands of independent actors; your journal, not a nemesis, explains your results.
Assuming every counterparty is a predictor you must out-forecast.
Self-check: List the players from this lesson and mark which ones even HAVE a price opinion. Most flow is hedging, plumbing, and policy — competition is real, but it is not all-knowing.

Practice — Journal

The other side, written down

In your journal, describe a hypothetical gold purchase you might make (price, size, reason). Then write three realistic candidates for who sold it to you and what each one wants. End with one sentence on which candidate should worry you and why. This habit — thinking in counterparties — is your first professional reflex.

Open the exercise

You are ready to move on when…

You can name the five participant groups and each one's reason for trading.
You can explain why a hedger can lose on a position and still be satisfied.
You can say honestly which participants you compete with and which you simply pay (spread) or coexist with.

Sources & evidence status

Bank for International Settlements, Triennial Central Bank Survey (2022)Documented
Global FX turnover of roughly US$7.5 trillion per day — the scale context for where retail flow sits.
Market-structure descriptions: LBMA (London OTC gold), CME (COMEX futures)Documented
Gold's liquidity is centered on London OTC dealing and US futures, with a global retail derivative layer on top.

Educational content only — not financial advice.