What is the average spread on XAUUSD?

One of the most popular markets to trade is gold (XAU/USD), but do you know that the spread you pay can reduce your profits faster than you think? The lowest XAU/USD spreads can start somewhere between 0.03 to 0.09 USD, but some brokers don’t start their spreads lower than 0.4 USD. Why does this matter? Because gold moves fast. A 0.2 USD spread might seem small, but during high volatility, spreads can widen 5x or more, turning a winning trade into a loss. That difference could cost you hundreds in trading costs over time. Smart traders don’t just watch price, they watch spreads.

The right broker and account type can cut your trading fees by more than half, but most traders don't look into this until it's too late. Want to retain more of your gains? Let’s break down how spreads work, which brokers offer the best rates, and what the average XAUUSD spread is. Spreads can make or break your gold trades. Here’s how to navigate them.

What is the XAUUSD Average Spread?

The average spread on XAU/USD (Gold against US Dollar) is very different depending on whether you have a commission-free or normal account and the execution model of the broker. Let's split it:

Standard Accounts

In normal or commission-free accounts, XAU/USD spreads are usually $0.1 to $0.4. Popular brokers such as Pepperstone and XM are usually in this spread, with extremely tight spreads during peak market hours. Such accounts are ideal for newbies or casual traders who prefer simple pricing without having to concern themselves with additional commission fees.

Raw Spread Accounts

If you've opened a raw spread account, you'll discover that spreads are considerably tighter at around $0.01 to $0.03 at the lowest spread brokers, but at the price of commission per trade. FP Markets and IC Markets are two of the brokers that offer very tight spreads on gold through such types of accounts, particularly when liquidity is high in the overlap of the London/New York trading sessions.

Aspects Affecting XAUUSD Spreads

XAU/USD spreads are not constant, they constantly vary depending on who you trade with, what type of account you're dealing with, and what is happening in the market. These are the biggest aspects that affect how tight (or loose) your spreads are:

Type of Broker: ECN/STP versus Market Maker

Not all brokers quote spreads the same way. ECN and STP brokers connect you directly to liquidity providers, offering faster execution, tighter spreads, and minimal conflict of interest. 

Market makers, on the other hand, set their own prices and usually provide slightly wider spreads since they take the opposite side of your trade. The trade-off? Simpler fee structures, but potentially higher costs during volatile market conditions.

Market Conditions

Spreads grow exponentially as the market fluctuates. NFP or FOMC announcements can increase spreads on a temporary basis when liquidity providers reduce or reprice. Similarly, in low liquidity periods, for example, late Asian sessions or holidays, brokers will widen spreads to cover.

Time of Day

The most constricted XAU/USD spreads generally happen during the London/New York overlap session when the market is most active and liquid. This is when brokers can offer their best prices, so this is the optimal time for scalpers or day traders to come in.

How to Reduce Spread Costs on XAUUSD

Gold is an extensively traded commodity all over the world, yet even small spread differences can add up, especially for regular traders. Here are some real-world techniques for keeping spread costs low when trading XAU/USD:

Trade During Hours of High Liquidity

Timing is more crucial than you think. Gold spreads are tight and narrowest when there's an overlap of the London and New York sessions, roughly 1:00 PM to 5:00 PM GMT. Volume is greatest and liquidity deepest at this time, and brokers can offer their best prices. Avoid trading the late-night or early-Asian hours if it can be helped at all.

Use a Low-Spread Broker

Choosing the right broker can significantly impact your trading results. Raw spread accounts typically offer much tighter pricing than standard accounts, but they also come with commission fees that you need to consider. 

It’s important to calculate which account type best suits your trading style. Many brokers provide both standard and raw accounts for gold trading, and they usually list their minimum and average spreads. 

When comparing brokers, look at both numbers—focusing only on the minimum spread can be misleading. For a head start, check out our guide to the lowest gold spread brokers, where we analyze both minimum and average spreads across some of the top brokers in the market.

Hedge With Correlated Assets

Another strategy is hedging gold exposure using correlated markets. For instance, silver (XAG/USD) and the US Dollar Index (USDX) move proportionally to gold. The strategic use of those instruments can be utilized to offset spread costs or reduce the need for overtrading XAU/USD in volatile or thin market conditions.

Knowing how to reduce spread costs on XAUUSD is essential, as gold is one of the most heavily traded commodities worldwide and even small spread differences can impact your profits, yet even small spread differences can add up, especially for regular traders. Here are some real-world techniques for keeping spread costs low when trading XAU/USD:

Hidden Expenses Outpace Spreads

While the most obvious trading costs are spreads, they're far from the only ones. If you're constantly buying and selling XAU/USD, take notice of the hidden fees that will creep up and nibble away at your profits.

Overnight Swaps

One of the most underappreciated gold trading costs is the swap or rollover fee, the interest paid (or received) for maintaining an overnight position. 

Some brokers charge way more than others, and those fees can pile up fast if you keep trades open for days. Make sure to check the broker's swap rates before you open any longer-term positions.

Slippage During Volatility

Another hidden cost is slippage, when your trade is executed at a worse price than you expected. This happens on high-impact news releases (e.g., NFP or Fed rate decisions), or non-hourly periods of the day when liquidity has decreased. 

Even if you have a small spread, if you're constantly being filled a few pips away from your desired price, your real cost of trading rises. ECN brokers usually offer faster execution, but slippage may occur with extremely volatile markets.

FAQs

Can XAU/USD spreads go to zero?

Yes, at some brokers it can. But it’s rare and usually temporary. During peak liquidity, especially during the London/New York session overlap, some raw spread brokers may offer spreads that briefly drop to zero on XAU/USD. However, even when spreads hit zero, you’re still paying commissions on raw spread accounts. So while the spread may vanish for a moment, the trade isn’t entirely free.

Is XAU/USD expensive to trade?

Not quite, but that will vary depending on when and how you trade. If you're trading low liquidity hours, holding positions overnight, or with a broker that has high spreads or high swap fees, the costs add up. But with the right broker, low spreads, and prompt trading, gold trading can be as inexpensive as major forex crosses.

Conclusion

Choosing the right broker for trading XAU/USD isn’t just about finding the lowest spread—it’s about seeing the bigger picture. From account types to trading hours, hidden costs and execution quality can significantly impact your trading. Every detail matters when your goal is to minimise costs and maximise execution efficiency.