Gold CFD vs physical gold: what leverage does to gains and losses
Physical gold and a gold CFD follow the same price, but they are different products with different risks. This guide compares them with one simple example and states plainly what leverage changes.
Last updated 2026-10-05 · Educational content, not investment advice
What you actually hold
- Physical gold: you own the metal. If price falls, you can lose at most what you paid.
- XAUUSD CFD: you hold a contract on the price with a broker, not the metal. You can go long or short, and you post only a fraction of the position value as margin.
One ounce, same price move
Say gold is 2,000 USD per ounce. Buying one ounce costs 2,000 USD. A CFD on one ounce (0.01 lot at a 100 oz contract) with leverage 1:100 needs 20 USD of margin.
- Price rises by 100 USD: the physical position gains 100 USD, which is 5% of the 2,000 USD paid. The CFD also gains 100 USD (before costs), which is 500% of the 20 USD margin.
- Price falls by 100 USD: the physical position loses 100 USD (5%). The CFD also loses 100 USD, five times the 20 USD margin you posted.
Hypothetical numbers to explain the effect of leverage. They ignore spread, swap and fees and are not a trading recommendation.
Why the CFD loss is the part people miss
With physical gold, the worst case is the amount you paid. With a CFD, the loss on a given price move is the same dollar amount as for physical gold, but it is large relative to the capital you posted. The account can be closed automatically before price recovers, which is the stop-out. See how to find the stop-out price.
Whether a loss can exceed the money in your account depends on your broker's terms and local rules, so read them before you trade.
Costs are different too
- Physical gold: dealer buy-sell spread, and sometimes making charges or storage.
- CFD: spread, possible commission and overnight swap.
Use the profit and loss calculator to put your own spread and commission into a trade, and the margin calculator to see how much margin a position locks up.
Check the rules where you live
Offering, promoting or trading leveraged CFDs is restricted or prohibited in some countries, and regulators publish warnings about unauthorised offshore providers. Check your national regulator before opening any account. Nothing here is an invitation to trade.
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Net result after spread and commission
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This tool is educational. Results are estimates from the numbers you enter and are not investment advice. Trading CFDs is high risk and you can lose everything. Read the full risk warning