IC Markets
You can open a 1-lot EUR/USD position for a few hundred dollars of margin, but the same size in gold needs far more. The reason is that brokers and regulators cap leverage lower on gold than on major currency pairs, because gold moves more. Lower leverage means higher margin for the same position. This guide shows the maths and the reasoning.
Leverage and margin are two sides of one number
Margin required is the position's notional value divided by the leverage. If EUR/USD allows 1:100 leverage, a position worth USD 100,000 needs USD 1,000 of margin. Where gold allows only 1:20, the same USD 100,000 position needs USD 5,000. Same notional exposure, five times the margin, purely because the leverage cap is lower.
Why gold's cap is lower
- Volatility. Gold's daily range as a percentage is larger and more variable than a major pair's, so a smaller price move wipes out a given margin buffer.
- Gap risk. Gold does not trade a true 24 hours and can gap on the Sunday open or around news, which a high-leverage position cannot absorb.
- Regulatory limits. Regulators such as ESMA and the FCA cap retail leverage on gold at 1:20, versus 1:30 on major currency pairs, precisely because of the volatility.
- Broker risk management. Even where regulation is lighter, brokers often set gold leverage below their currency leverage to limit their own exposure to a fast-moving instrument.
| Instrument | Typical retail max leverage | Margin for USD 100,000 notional |
|---|---|---|
| EUR/USD | 1:30 (EU/UK) to 1:500 (offshore) | USD 200 to USD 3,333 |
| XAUUSD (gold) | 1:20 (EU/UK) to 1:200 (offshore) | USD 500 to USD 5,000 |
| Minor FX pairs | 1:20 to 1:200 | USD 500 to USD 5,000 |
| Exotic FX pairs | 1:10 to 1:50 | USD 2,000 to USD 10,000 |
It can change around news
Some brokers temporarily raise margin requirements, meaning they cut leverage, on gold and other volatile instruments in the hours around major news such as an FOMC decision, or over weekends. A position that needed USD 500 of margin on Thursday might need USD 1,000 on Friday afternoon. This is disclosed in the broker's terms and is a risk control, not a fee. The changed-leverage guide covers this.
Sofia opened a gold trade that used USD 480 of margin and was surprised when a similar-sized EUR/USD trade used only USD 95. Her broker allowed 1:200 on EUR/USD and 1:40 on gold. The difference was entirely the leverage cap. She sized her gold positions smaller to keep the same 1 per cent account risk, since the wider stop distance gold needs already pushes toward a smaller position anyway.
Watch the free margin, not just the requirement
Because a gold position ties up more margin, it reduces your free margin faster than a currency trade of the same notional size. If you hold gold alongside currency positions, the gold trade can be what pushes your margin level toward a stop-out during a drawdown, even though the currency trades are the ones you are watching. Treat a gold position as using several times the buffer a same-size currency position would, and leave headroom accordingly.
| Position | Notional | Margin at typical retail leverage |
|---|---|---|
| 1 lot EUR/USD | ~USD 108,000 | ~USD 360 at 1:30, ~USD 216 at 1:500 |
| 1 lot XAUUSD | ~USD 240,000 (100 oz) | ~USD 12,000 at 1:20, ~USD 1,200 at 1:200 |
Do not treat higher gold margin as a reason to use more leverage where the broker allows it. Gold's volatility means your position size should come from your stop distance and a fixed 1 per cent account risk, which usually lands you well below the maximum the margin allows.
Higher margin on gold is the system telling you gold is riskier per unit than EUR/USD, and it is right. The mistake is to seek out an offshore broker offering 1:500 on gold so you can take a bigger position for the same margin. That volatility did not go away; you just removed the buffer. Size gold from your stop, not from the margin the broker will let you use.
Frequently asked
Why does gold need more margin than EUR/USD?
Brokers and regulators cap leverage lower on gold than on major currency pairs because gold is more volatile and can gap. Margin required is the position's notional value divided by the leverage, so a lower leverage cap means higher margin for the same position size.
What leverage do brokers allow on gold?
Regulated brokers in the EU and UK cap retail gold leverage at 1:20, versus 1:30 on major currency pairs. Offshore brokers may offer 1:100 to 1:200 or more, but the underlying volatility is unchanged.
Why did my gold margin requirement go up?
Some brokers temporarily raise margin requirements on gold around major news events such as an FOMC decision, or over weekends, to limit their exposure to a fast-moving instrument. This is disclosed in the account terms and is a risk control, not a charge.
Should I use a broker that offers high leverage on gold?
Not for the leverage itself. Gold's volatility means a sensible position size comes from your stop distance and a fixed account risk, which usually sits well below the maximum position the margin allows. High leverage removes the buffer without reducing the risk.
How do I size a gold position correctly?
Decide your risk in account currency, typically 1 per cent, measure your stop distance, and calculate the position size so that hitting the stop equals that risk. Gold's wider stop distance already pushes toward a smaller position than you would use on EUR/USD.