Metals Quotes

How to read a spot metal quote

Reading a spot gold or silver quote is very similar to reading a Forex quote. Quotes for spot metals are represented in the same way as quotes for currency pairs. For example, spot gold traded against the US dollar is XAU/USD.

Spot metal prices are quoted internationally in US dollars per troy ounce, so for a quote of XAU / USD 900.25, 1oz of gold is equal to $900.25

When the quote for gold goes up, this means that gold has strengthened in value and is now worth more dollars than before.

Conversely, when the quote for gold goes down, this means that the value of gold has weakened compared to the dollar, and it is therefore worth fewer dollars than before.

Bids, asks and the spread

Just like other markets, spot gold and silver quotes consist of the BID and the ASK:

The BID is the price at which you can SELL.
The ASK is the price at which you can BUY.

The difference between the bid and ask prices is called the spread, and represents the cost of trading.

Trading spot metals

Spot metals are quoted internationally in US dollars per troy ounce, and trading takes place in ‘lots’. A single lot of gold is 10oz. A single lot of silver is 500oz.

A typical quote you might receive for spot gold is 900.25/75. This means that you could sell at 900.25, or buy at 900.75. The spread is the difference between these two prices (900.75-900.25) or 0.50, and represents the cost of trading.

The smallest amount that you can trade with FOREX.com is 1 lot,(10 troy oz). At 1 lot, the smallest price change possible (0.01) is equivalent to $0.10.

As an example:

You decide to buy 1 lot of XAU/USD (spot gold) at 900.25.

A few minutes later, the bid (or sell) price has risen to 900.95, and you decide to exit your trade.

Calculating your profit:

You bought 1 lot at 900.25

You sold 1 lot at 900.95 a difference of 0.70, or 70 pips

I lot = 10 oz, and the price quoted is always for 1 oz

Your trade has therefore made 70 pips x$0.10, equal to $7.00.

If the price had moved against you to 899.60, your loss would be calculated as follows:

You bought1 lot at 900.25

You sold 1 lot at 899.60, a difference of 65 pips.

Your trade has therefore made 65 pips x $0.10 per pip, equals to $6.50.

Pips or points

Like forex prices, spot gold prices are quoted in very small increments called pips or "percentage in point". A pip refers to the second decimal place for a spot gold quote, or 0.01.

Each pip represents 1 cent in dollar value.

When calculating the value of your trade, remember that spot metals trade in lots. For spot gold, a lot is 10oz, which means that a one pip (1 cent) movement in the gold price represents a $0.10 dollar price movement for each lot that you are trading. 

Pips or points, what's the difference? 

Like Forex prices, spot metals prices are quoted in very small increments called pips or "percentage in point". A pip refers to the second decimal place for a spot metals quote, or 0.01.

Each pip represents 1 cent in dollar value.

When calculating the value of your trade, remember that spot metals trade in lots. For spot gold, a lot is 10oz, which means that a one pip (1 cent) movement in the gold price represents a $0.10 dollar price movement for each lot that you are trading.