The Spread Is Paid the Moment You Enter
When you buy XAU/USD, you pay the ask; when you sell, you receive the bid. The difference — the spread — is a cost you incur immediately on entry. Unlike commissions that may be charged separately, the spread is embedded in the quote, so your position starts slightly underwater relative to the mid-price. For any trade, the market must move in your favour by at least the spread before you break even.
This is especially relevant for short-horizon traders who may enter and exit frequently. Each round trip involves paying the spread, and over many trades, these costs accumulate. Even if your analysis is correct, the spread acts as a hurdle that must be overcome on every single trade.
| Instrument class | Spot gold |
|---|---|
| One pip | 0.01 |
| Standard lot | 100 troy ounces |
| Value of one pip per lot | $1.00 |
| Typical spread | 30 pips — · FxPro verified |
| Notional value of one lot | — |
| Margin on one lot at 1:30 / 1:100 / 1:500 | — |
The last two rows move with the market and are filled in from the live rate; everything above them is fixed by the contract. Leverage available to you depends on your regulator and account type — check it in the platform before you size a position.
Why Gold Spreads Are Wider Than Major Forex Pairs
Gold is not a currency pair; it is a commodity quoted in US dollars. The XAU/USD market is deep but not as continuously liquid as the most traded forex pairs like EUR/USD or USD/JPY. This structural difference means liquidity providers quote wider spreads to compensate for the slightly higher risk and lower tick volume. Additionally, gold's higher volatility can lead to wider spreads as market makers adjust for potential adverse price swings.
For traders, this means that the cost of entering a gold trade is inherently higher than for a major forex pair. Strategies that rely on tight spreads — such as scalping or high-frequency trading — face a tougher environment in gold. The wider spread demands a larger price movement to achieve profitability, which can reduce the appeal of very short-term approaches.
| Currency | Central bank | Policy rate | What moves it |
|---|---|---|---|
| XAU | No issuer | Priced in USD | real US yields · FOMC · fund flows |
| USD | Federal Reserve (Fed) | Federal funds target range | FOMC · CPI · jobs data |
Session Liquidity and Spread Behaviour
The spread on XAU/USD is not constant; it fluctuates with market liquidity. During the most liquid sessions — when major financial centres are active — spreads tend to be narrower. Outside these hours, such as during the late New York session or the transition to the Asian session, liquidity thins, and spreads widen. This widening is not a minor adjustment; it can significantly increase the cost of entering a trade.
For short-horizon traders, timing entries around liquid sessions becomes crucial. Trading during illiquid periods means paying a higher spread, which can erode profits quickly, especially if the strategy involves frequent trades. Even if the market is moving, the wider spread may make it difficult to capture gains. Understanding when liquidity is abundant helps traders avoid unnecessarily high costs.
Spreads are tightest when two sessions are open at once and widest when one desk has gone home and the next has not arrived. The shaded band is the overlap.
Gold pip values use the fixed contract specification combined with live ECB reference rates. All values are indicative and for educational purposes — not live trading quotes. See full pip value table →