How Spot Gold Is Quoted, Cleared and Settled

Most traders meet gold as a chart. A line that moves, a buy button, a sell button, and a number in the corner that turns green or red. Nothing in that interface tells you what you are holding, who is on the other side of it, or why the account balance shifted slightly overnight while the price sat still.

That gap matters more than it looks. Position sizing is arithmetic done on contract size. Holding a swing trade for three weeks is a financing decision whether you treat it as one or not. Weekend gap risk is a direct consequence of where this market actually clears. If the instrument stays an abstraction, every one of those decisions is guesswork dressed up as analysis.

So this guide takes XAU/USD apart. What the quote refers to. What a lot is. What happens at the end of each trading day. And who your counterparty really is.

Spot gold is quoted in US dollars per troy ounce. The reference market is loco London: unallocated gold sitting in London vaults, deliverable in Good Delivery bars, traded over the counter between banks rather than on an exchange floor. "Spot" refers to the settlement convention, which is two business days after the trade date, normally written T+2. Your retail platform inherits that convention even though you will almost certainly never take delivery of metal.

The second half of the ticker is the part most people skip. XAU/USD is a pair. Gold is the base, the dollar is the quote. You are not long gold; you are long gold and short dollars, and both legs can move.

That single fact explains a lot of confusing price action. A quiet metal market combined with a weakening dollar still produces a rising XAU/USD chart. Real buying of metal against a strengthening dollar can produce a flat one. Priced in euros or yen, the same day can look completely different. The chart is a ratio between two things, not a thermometer stuck in one of them.

It is also why dollar-side events move gold. Rate expectations, inflation prints, central bank language, Treasury yields — none of them change a bar in a vault, but all of them change what a dollar is worth, and the dollar is half of your position.

One standard lot of spot gold is 100 troy ounces. A mini lot is 10 ounces. A micro lot is 1 ounce. Most platforms quote the price to two decimal places, and most platform disputes about "pips" come from arguing over decimals instead of counting dollars per ounce.

Count dollars per ounce. Because the quote currency is the dollar, and most retail accounts are denominated in dollars, the arithmetic is unusually clean. A $1.00 move in price on 100 ounces is $100. On 10 ounces it is $10. There is no conversion step, no cross rate to apply at the end.

That means you can work the sizing backwards instead of forwards, which is the correct direction. Take the money you are prepared to lose on the trade. Divide it by the distance in dollars from your entry to the price that proves the idea wrong. The answer is a number of ounces. If you are prepared to lose $200 and your invalidation sits $4.00 away, you can carry 50 ounces — half a standard lot.

Notice what did not appear in that calculation: leverage. Leverage decides how much of your balance is tied up as collateral while the position is open. It does not change what a dollar of movement costs you. Traders who size by leverage are letting the broker's margin schedule choose their risk for them.

If spot settles two business days forward, what happens when you hold past that date? The position is rolled. It is closed at the old value date and reopened at a new one, and a cash adjustment is applied to your account to reflect the difference.

That adjustment is financing. It comes from the interest rate differential between the dollar and gold's own borrowing cost, plus whatever markup your broker applies. It is credited or debited around 5pm New York, when the trading day rolls over, and most desks apply three days of financing on Wednesday because that roll covers the weekend value dates.

It is not a penalty and it is not a sign you are doing something wrong. It is the cost of holding metal you have not paid for outright, and in some conditions it can run in your favour rather than against you. What it is, always, is a price on time.

The practical consequence is this. An intraday trade never meets rollover at all. A position held for six weeks meets it something like thirty times, and the cumulative figure stops being a rounding error. That does not make swing trading wrong. It makes financing something you check before you commit, in the same breath as checking the spread, not something you discover in the statement afterwards.

Retail spot gold is an over-the-counter product. There is no central clearing house standing between you and the market. Your broker is your counterparty, pricing off the interbank market and managing its own book. That is a structural fact about the instrument, and it is worth knowing which entity holds your money and under which regulator.

Exchange-traded gold futures work differently. The COMEX contract is also 100 troy ounces, but it is centrally cleared, has fixed expiry dates, and settles against the exchange rather than a dealer. Spot has no expiry, which is exactly why rollover exists. One instrument prices time through the forward curve; the other prices it nightly through financing.

Margin is the other piece people misread. Margin is collateral, not cost. It is your own money, ring-fenced in your own account while the position is open, and released when you close. It is not a fee, it is not paid to anyone, and it is not a measure of how much you can lose. Free margin, margin level and the broker's stop-out threshold determine when the position is closed for you — which is a decision you should never outsource.

Finally, the market closes on the weekend and the world does not. Price can reopen away from where it left, and a stop order is an instruction to exit at the first available price, not a promise about which price that will be. Gap risk is not a flaw in your plan; it is a property of a market with opening hours.

None of this is meant to be memorised. It is desk reference material — the kind of thing you want on one page, beside you, while you are sizing a position rather than three days later when you are trying to explain a statement line to yourself.

That is what the MMFX Ebook Library is for. Cheat Sheets and Quick Reference is the desk reference for sessions, levels and checklists, which is where contract size and session timing belong. Decision Trees and Invalidation deals with when the thesis breaks, where the stop sits and why — and that stop distance is the number you divide into, the one that turns risk into ounces. The Five-Stage Workflow walks the MM System end to end: bias, zone, trigger, risk, manage. The mechanics in this guide live in the risk stage, and they are the difference between a size you chose and a size you typed.

Read them in that order if the instrument still feels abstract. Specs first, invalidation second, workflow to hold it all together. The point is not to know more about gold. It is to build a consistent process where the arithmetic is settled before the chart starts moving.

Trading carries risk of loss. Every decision you take in your account is yours alone, and nothing on this page is financial advice.