Investing in gold has been a sought-after commodity for wealth hunters and an actively traded asset for hundreds of years. The precious metal acts as a store of value, a hedge against inflation, and the excess printing of fiat or paper currencies. Gold is seen by many investors as being largely uncorrelated to the performance of other asset classes, such as equities.
But how can would-be investors buy gold with a firm such as Interactive Brokers, one of the world’s largest online trading providers.
Interactive Brokers, or IBKR, as the firm is often referred to, offers its clients a variety of ways to gain exposure to the yellow metal, including CFDs, Futures and Options as well as gold-related equities and ETFs.
These products can be traded via the firm’s various dealing platforms.
Of course, to start trading gold at IBKR you will need to be a client of the firm, and to do that you will need to have opened and funded a trading account with them.
How to buy gold on Interactive Brokers
To buy gold on Interactive Brokers traders simply need to find the instrument they are interested in on their dealing platform, for example, CFDs on gold, within IBKR, have the ticker XAUUSD.
However, to view live prices and trade in this instrument, clients will need to subscribe to physical metals and commodities data, in their IBKR client portal.
And they will also need to meet financial suitability tests and to demonstrate that they understand the risks involved in trading OTC leveraged products.
Trading gold-related equities such as gold miners and processors, isn’t restricted in the way that CFD trading is.
Futures, Options and ETFs
An alternative to trading CFDs on gold is to trade futures and options over the metal.
Though, here again, clients will need to demonstrate suitability and an understanding of the products they are trading.
Futures markets developed as wholesale commercial markets, designed to help producers and consumers fix prices and guarantee supplies of raw materials.
Retail traders can deal in these markets, and indeed the major futures exchanges have introduced Mini and Micro contacts, over popular instruments, like gold to facilitate that.
However, retail traders need to remember that gold futures traded on the CME are deliverable, and not cash-settled.
Futures contracts have pre-defined contract sizes, finite life spans and fixed expiry dates, unlike CFDs.
Trading futures also involves the posting of initial and variation margins while any position is held open.
Initial margin acts as a deposit whilst, variation margin is posted to meet any running losses on an open position, failing to meet a variation margin call can result in your position being closed out .
Futures contracts impose an obligation on both the buyer and the seller of the contract.
For example, a buyer of Dec 2025 Gold will have to take delivery of that gold on a specified date in December 2025.
Whilst the seller of the contract must make delivery of the gold on the specified date, Interactive Brokers can administer this process for you.
Of course, either party can trade out of their position ahead of the expiry and delivery dates, because in exchange-traded futures a central clearing house acts as a counterparty to both sides of every trade.
Most retail traders would typically close, or roll their positions forward into a new contract month ahead of time, rather than take or make delivery.
Options contracts confer rights, but not obligations to buyers of call and puts. However, they do impose obligations on sellers of these contracts.
Option sellers must make or take delivery of the underlying instrument if they are exercised against.
Options contracts also have pre-defined contract sizes, finite life spans and fixed expiry dates.
Gold ETFs or Exchange Traded Funds, are open-ended investment vehicles that track the performance of an index, sector, asset class or investment style.
There are thousands of ETFs listed worldwide, though, unfortunately, they are not all available to UK investors. However, there are UK-eligible ETFs that track the price of physical gold and others which track the performance of gold mining stocks.
No tax free gold trading
One form of leveraged trading in gold that Interactive Brokers don’t offer is spread betting.
Financial spread betting can be thought of as a hybrid between CFDs and Futures, in that spread bets are often priced like futures contracts, that is, with the cost of carry, or financing included in the price, but like CFDs Spread bets don’t have standard contract sizes.
Crucially, they are not trades, rather they are bets on the rise and fall in the value, or price of an underlying instrument.
When you spread bet (just as when you trade CFDs) you don’t have ownership of the underlying asset, merely an economic interest in the fluctuation of its price.
Spread betting occupies a niche in UK markets, thanks largely to the tax treatment of profits earned through betting, which are exempt from CGT under current legislation.
Note though that Spread betting losses can’t be offset against gains made elsewhere.
As a niche product, that is peculiar to the UK and UK taxpayers, it is debatable whether a US broker, such as IBKR, would ever choose to introduce spread betting.
Cost of trading gold compared at IBKR compared to other brokers
Interactive Brokers is a low-cost broker and as such its commission changes are very commercial.
For example, for a CFD trade on the price of gold, in London, it charges just 1.50 basis points or 0.015% on trades with a value of up to US $500,000, subject to a minimum commission of $2.00.
Between $500,000 and $1,000,000 the commission falls to just 1.0 basis point and reduces further on considerations above that.
Futures and options commissions at IBKR are based on the monthly volume traded.
If you trade 1000 contracts or less then you pay 85 cents per lot. That scales down to as little as 20 cents per lot if you trade 20,000 contracts or more per month.
Equity and ETF trading commissions start at 0.05% of the trade value with a minimum ticket between £1.00 and £4.00 depending on how and where the order is routed.
It is possible to deal commission-free with some rival brokers in US stocks, and IG Group has just launched an exchange-traded futures and options business in the UK, in partnership with its US subsidiary tastytrade.
Initial fees for Futures and options are higher than those offered by Interactive Brokers, however, IG is offering a capped commission of $10.00 per order per leg.
So as ever, it is a case of looking at how frequently you are likely to trade and the volumes you will execute and working out which service is best for you.
You can see compare different gold trading platforms below:
| Gold Broker | Gold Trading Costs | Minimum Deposit | GMG Rating | More Info | Risk Warning |
|---|---|---|---|---|---|
 | 0.8 | £100 | See Platform | 70% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.8 | £100 | See Platform | 75% of retail investor accounts lose money when trading CFDs with this provider. | |
 | 0.0007% | $2,000 | See Platform | 60% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.3 | £1 | See Platform | 64% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.3 | £100 | See Platform | 80% of retail investor accounts lose money when trading CFDs with this provider. | |
 | 0.3 | £250 | See Platform | 70% of retail investor accounts lose money when trading CFDs and spread bets with this provider. | |
 | 0.5 | £1 | See Platform | 65% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.9 | $50 | See Platform | 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money | |
 | 0.3 | £1 | See Platform | 68% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.35 | £1 | See Platform | 73% of retail investor accounts lose money when trading CFDs with this provider | |
 | 0.5 | £1 | See Platform | 75.3% of retail investor accounts lose money when trading CFDs with this provider | |
 | 19 cents | £10 | See Platform | 66.95% of retail investor accounts lose money when trading CFDs with this provider |
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
During his career, Darren has acted for and advised major hedge funds and investment banks such as GLG, Thames River, Ruby Capital and CQS, Dresdner Kleinwort and HSBC.
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As well as extensive experience of writing financial commentary, he previously worked as a Market Research & Client Relationships Manager at Admiral Markets UK Ltd, before providing expert insights as a market analyst at Pepperstone.
Darren is an expert in areas like currency, CFDs, equities and derivatives and has authored over 260 guides on GoodMoneyGuide.com.
He has an aptitude for explaining trading concepts in a way that newcomers can understand, such as this guide to day trading Forex at Pepperstone.com
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