Spreads Explained: Why Fixed Spreads Matter on News Days

A spread is the gap between the buy price and the sell price of an instrument. It is the first cost a trader pays on any position, before the market even moves. Understanding how spreads work, and why they sometimes change, is a basic building block for anyone starting out in forex, gold or CFD trading. Most brokers quote one of two types of spread. A variable (or floating) spread moves with market conditions. During calm trading hours it can look very tight, but it tends to widen when liquidity drops or when a major piece of data is due. A fixed spread, by contrast, stays the same number regardless of how busy or quiet the market is. Why spreads widen around news Liquidity providers supply the prices that brokers pass on to traders. In the seconds before and after a high-impact release, those providers often pull back or add a buffer to protect themselves from sudden price gaps. That buffer shows up to the trader as a wider spread. This week brings several events that typically see this effect: the US Federal Reserve's rate decision on October 28, the Bank of Canada's rate decision and press conference the same day, the RBNZ's Official Cash Rate announcement, and Australia's CPI figures, all clustered within a 24-hour window. Each of these is the kind of scheduled, high-impact event where liquidity can thin out briefly. This is not unique to one market. Equity index CFDs like the Dow Jones, commodities like gold and oil, and major currency pairs can all see spread behaviour change around their relevant data points, whether that is a central bank statement, an inflation report, or a budget release such as the UK's Annual Budget on October 28. How a wider spread affects a trade A wider spread means the distance between entry and exit prices is larger at that moment. For a trader opening or closing a position during a news window, this can change the effective cost of the trade compared to opening it in quieter conditions. It does not change the direction the market moves, only the cost of getting in or out at that particular instant. This is simply a mechanical feature of how pricing works, not a comment on whether a given moment is better or worse to trade. Fixed spreads on gold, oil and the Dow Jones Because spreads can behave differently depending on market conditions, some traders prefer instruments or account types where the spread is set at a fixed number rather than left to float. On Investo Markets, gold carries a fixed spread of 20 cents, oil is fixed at 2 cents a barrel, and the Dow Jones is fixed at 2 points. Silver is fixed at 6 cents and the Nasdaq at 1.75 points. These numbers are stated upfront and do not move when scheduled news, such as the Fed decision or the BOC Monetary Policy Report, is released. Margin requirements are also not raised around news events, and the first three days of any open position are swap-free. Trading is done through the MetaTrader 5 platform, and deposits and withdrawals are typically processed in around 15 minutes on average. Keeping an eye on the calendar For context, gold futures last traded near 4058.5 with spot XAUUSD around 4061.36, the Dow Jones futures near 52811, and WTI crude near 101.9, all figures that move throughout the trading day and should not be read as live prices. Whatever a trader's approach, checking which high-impact events fall on a given day, such as this week's run of central bank decisions, is a simple way to understand when spread or liquidity conditions may differ from a typical session. Trading leveraged products involves significant risk of loss and is not suitable for everyone.