The gold spread in the Forex market refers to the difference between the bid and ask prices of the gold pair (XAU/USD). In this guide, you will learn how to calculate the gold spread in detail and explore methods to reduce spread costs with Trendo.
One of the key concepts in Forex trading is the gold spread, which plays a decisive role in profitability and cost management. Spread, as a hidden trading cost, is influenced by various factors such as market liquidity, price volatility, and broker policies. In this article by the Trendo educational team, we take a precise and in-depth look at the concept of gold spread, how it is calculated, the factors affecting it, the best trading times to minimize costs, and key tips for smarter gold trading.
What Is Gold Spread?
Gold spread refers to the difference between the bid (buy) and ask (sell) prices of gold (XAU/USD) in the Forex market. In practice, this price difference represents the cost traders pay when opening a gold trade and is one of the key elements affecting overall profitability.
As mentioned, the gold spread in Forex is influenced by factors such as market liquidity, price volatility, and broker conditions. For example, spreads widen during highly volatile markets, while they usually narrow in stable conditions. A clear understanding of gold spread helps traders manage trading costs more effectively and design optimized trading strategies.
General and Technical Concept of Spread in Financial Markets
Alongside commissions, spread is a major determinant of trading costs and reflects both market liquidity and efficiency. To fully understand spread, you should also be familiar with the concept of the Order Book.
An order book records all buy and sell orders for an asset in real time. It typically consists of two columns:
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Ask column: sellers’ offers (lowest price first).
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Bid column: buyers’ offers (highest price first).
The highest current bid is referred to as the Bid price, and the lowest current ask is the Ask price.
Therefore, a lower spread indicates a more active market with lower trading costs, while a higher spread increases costs and reflects lower liquidity.
Technical Definition of Gold Spread
In its simplest and most precise form:
The gold spread is the difference between the bid and ask prices of XAU/USD in Forex, as derived from the order book.
This cost, which traders pay when trading gold, is usually displayed in pips or pipettes.
Register with Trendo and trade gold with spreads below one pip!
Types of Gold Spread in Forex
As one of the trading costs in Forex, gold spreads are offered in different types:
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Fixed Spread
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Floating (Variable) Spread
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Zero or Near-Zero Spread
Fixed Spread
A fixed gold spread provides stable and predictable trading costs. Determined by the broker, this type remains unchanged during normal market conditions and is ideal for beginner traders who want cost certainty. However, during major economic events, fixed spreads may still adjust. Fixed spreads are often higher than variable spreads, and most brokers do not widely offer them due to low demand.
Floating Spread
A floating (variable) spread changes with market liquidity and volatility. During peak trading hours, spreads tighten, lowering costs, but during volatile periods such as major news releases, spreads may widen. Most brokers provide floating spreads on gold.
Zero or Near-Zero Spread
Common in ECN accounts, these spreads can approach zero under high-liquidity conditions, especially in major Forex pairs like EUR/USD. At Trendo, major pairs during the London and New York sessions offer zero spreads.
Note: Zero spreads are still a type of variable spread.
How to Calculate Gold Spread
Calculating gold spread in Forex is simple:
Spread = Ask Price – Bid Price
For example, if the best bid for gold is $2,300 and the best ask is $2,300.20, the spread equals $0.20 or 2 pips.
Most trading platforms automatically calculate and display spreads in real time, so manual calculation is rarely necessary.
Converting Spread to USD or Percentage
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Spread to USD: Multiply the spread (in pips) by the pip value.
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Example: 3 pips × $10 per pip = $30 spread cost per 1 lot trade.
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Spread to %: Divide the spread by the ask price and multiply by 100.
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Example: Spread of 3 pips with an ask of $3,200 → 0.09%.
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Factors Affecting Gold Spread
Several factors influence gold spreads in Forex. Understanding these helps traders minimize costs:
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Market Liquidity – Higher liquidity (e.g., London/New York overlap) narrows spreads.
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Market Volatility – High volatility (e.g., major news releases) widens spreads.
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Broker Policies – Each broker sets unique spreads. Choosing a transparent broker is crucial.
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Broker Operating Costs – Higher tech and liquidity providers reduce spreads.
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Economic & Political Events – Interest rate decisions, inflation reports, or geopolitical tensions increase spreads.
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Low Commissions – Brokers with lower fees usually offer tighter spreads.
Best Time to Trade Gold to Reduce Spread
The optimal time to trade gold (XAU/USD) is during the London–New York overlap, when liquidity is highest and spreads narrow. Conversely, spreads widen significantly during major news releases such as Federal Reserve announcements or inflation reports.
Why Gold Spread Matters
If you are a gold trader, your profitability depends heavily on spreads. Even small differences add up across many trades, directly impacting financial success. Choosing a broker with consistently low spreads is therefore essential.
Real Example of Spread Impact on Profitability
Two traders each open 100 short-term gold trades with a volume of 0.03 lots:
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Trader 1 with Trendo:
Average spread 0.5 pip + $6 commission per lot → total trading cost: $33. -
Trader 2 with other brokers:
Average spread 1.5 pips + $8 commission per lot → total trading cost: ~$69.
As shown, even small differences in spreads can more than double trading costs and dramatically affect long-term profitability.
How Global Events Influence Gold Spread
Gold reacts instantly to economic and political events:
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Interest Rate Announcements – Sudden volatility increases spreads.
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Employment & Inflation Reports – Unexpected data widens spreads on XAU/USD.
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Geopolitical Tensions – Wars, sanctions, or political crises drive gold demand higher but reduce liquidity, widening spreads.
Practical Strategies to Reduce Gold Spread
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Trade during high-liquidity hours (London–New York overlap).
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Use ECN accounts with floating spreads.
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Avoid trading during major news releases.
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Choose a trusted broker with low fees.
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Manage trade size carefully to avoid unnecessary spread costs.
Key Tips for Managing Gold Spread
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Broker Choice: Select brokers with competitive spreads, fast execution, and strong support.
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Timing: Trade gold during peak sessions for the lowest spreads.
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Account Type: ECN and STP accounts provide near-zero spreads.
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Position Sizing: Use optimal lot sizes to control costs.
At Trendo, average gold spreads are just 0.5 pips, compared to ~1.5 pips at other brokers — nearly 3× higher!
Trendo: Your Partner for Smarter Gold Trading
Speed, accuracy, and security are essential in trading. Trendo delivers on all three, offering:
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ECN accounts with ultra-low spreads (avg. 0.5 pip on gold).
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Low commission ($3 per lot).
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Proprietary high-speed trading platform with advanced tools.
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Instant, fee-free deposits & withdrawals.
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Islamic (swap-free) accounts.
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$100 no-deposit bonus, cashback, and referral rewards.
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24/7 professional Persian support.
