Why do I pay Daily Fx interest on Spot gold?

[quluqulu]

Am I being an idiot to trade USD Gold instead of  a GBP instrument which is my base currency? 

I just noticed significant FX charges, I don't get why

27/10/22

WITH

Daily FX Interest for 3 day Spot Gold

-

-

-

0

£

£-7.15

[OfentseIG]

18 hours ago, quluqulu said:

Am I being an idiot to trade USD Gold instead of  a GBP instrument which is my base currency? 

I just noticed significant FX charges, I don't get why

27/10/22

WITH

Daily FX Interest for 3 day Spot Gold

-

-

-

0

£

£-7.15

Hi @quluqulu

Thank you for reaching out. 

The charge on your account was for holding the position through Wednesday 10pm UK time. The position will incur three days’ worth of funding to cover the settlement of trades over the weekend. This is because FX settles on a T+2 basis and Spot Gold overnight funding is calculated the same way as FX overnight funding. 

All positions help through 10pm UK time will be charged overnight funding, whether USD denominated or GBP denominated. All the best, OfentseIG

[quluqulu]

why FX? is because there is a running negative balance even though it's well covered by the GBP balance?

Would I save this charge by closing the position and reopen it?

[OfentseIG]

27 minutes ago, quluqulu said:

why FX? is because there is a running negative balance even though it's well covered by the GBP balance?

Would I save this charge by closing the position and reopen it?

Hi @quluqulu

Spot Silver and Spot Gold are priced the same way as FX contracts. The spot market is an Over the Counter (OTC) market, which means that there is no central exchange in which currencies are traded. 

Overnight funding is charged if you hold the position over 10pm UK time. The charge is not based on negative balance but for holding the position through 10pm, and charged as a Cost to Hold from one day to the next. 

The payment can either be a charge or a credit as the Tom-Next rate changes daily. All the best, OfentseIG

[quluqulu]

why is this called a FX charge?

[OfentseIG]

19 minutes ago, quluqulu said:

why is this called a FX charge?

Hi @quluqulu

It's not an FX charge. 

 The spot market is an Over the Counter (OTC) market, which means that there is no central exchange in which currencies are traded. 

Overnight funding is charged if you hold the position over 10pm UK time. The charge is not based on negative balance but for holding the position through 10pm, and charged as a Cost to Hold from one day to the next. 

The payment can either be a charge or a credit as the Tom-Next rate changes daily. All the best, OfentseIG