Bid, ask and spread in gold trading
The bid is the price you can sell at, the ask is the price you can buy at, and the spread between them is the cost paid on every gold trade.
Also called Bid/offer, Spread cost
Every XAUUSD quote has two prices. The bid is what the market will pay you if you sell. The ask (or offer) is what you pay if you buy. The spread is the difference. Because you buy at the higher price and sell at the lower one, a new position starts slightly in loss by the size of the spread, before any commission.
How it applies to gold trading
Gold spreads are quoted in cents and vary with liquidity. Suppose the quote is 4,000.10 / 4,000.40, a 30-cent spread. On a micro lot (1 ounce) that is $0.30; on a standard lot (100 ounces) it is $30, paid the moment the trade opens. A scalper who takes ten standard-lot trades a day at that spread pays $300 in spread before winning or losing anything.
Spreads are tightest during the London and New York sessions and widest during the daily break, in the thin hours after the New York close, and in the seconds around major US data, when they can widen many times over. Spread is not the whole cost: commission and swap come on top.
A common mistake
Placing a stop-loss based on the chart’s mid or bid line without allowing for the spread. A sell position is closed at the ask, so a widening spread can trigger a stop even when the bid never reached it.
See also: Slippage, Commission, Swap and rollover, News spike.
Frequently asked questions
Why does the gold spread widen at night?
Fewer participants are quoting prices, so liquidity providers protect themselves with wider spreads. The widest periods are usually the daily break and the hour or two around it.
Is a lower spread always cheaper?
Not necessarily. Some accounts pair a tight spread with a per-lot commission. Compare the total round-trip cost, spread plus commission, for your typical trade size.
Which side of the spread is shown on my chart?
Most charts plot the bid by default. Buy orders fill at the ask, which sits above the plotted line, so a candle’s high may not match your fill.