A contract on the gold price, not the metal

A contract beside a pawn

A pawn of gold in Sri Lanka is a physical thing: eight grams that must be weighed, assayed for karat, and sold back to a dealer or pawnbroker. The price you get is the metal price minus a deduction, and the transaction happens in person. A contract for difference with FxPro is the opposite. It is a paper position on the gold price, settled in the account’s currency, and no metal changes hands. You cannot take delivery of a bar, and you cannot pawn the contract.

The two also differ in what they cost. A pawn has a making charge if you buy it new, and a buy-back deduction if you sell it. A contract for difference has a spread between the buy and sell price, and an overnight charge if the position is held. Both are costs, but they are charged differently, and the contract’s costs are in the terms, not in a shop.

Karat, making charge and weight have no meaning

The gold price that FxPro quotes is for one troy ounce of fine gold in US dollars, or in a currency pair. There is no karat in a contract for difference. A twenty-two karat row on this site is the twenty-four karat price multiplied by a fraction, but the contract trades only the twenty-four karat price. If you want exposure to twenty-two karat gold, you would have to adjust the size of your position yourself; the broker does not offer a twenty-two karat contract.

The making charge and the pawn weight are also absent. A contract has no making charge because it delivers no jewellery, and it has no pawn weight because it is not measured in eight-gram units. The contract is a pure bet on the price of one troy ounce. That makes it simpler in one way, but it also means you cannot walk into a shop with it.

What to read in the terms

Before an account is opened from Sri Lanka, read the terms that apply to your country. The broker’s documents will state which currency the account is settled in, what the spread on gold is, and what the overnight charge is. They will also state that the contract is settled in cash and that you have no claim on any metal. These are not hidden; they are in the terms, and you should read them before you deposit any money.

Opening an account requires identification and takes a day or two. A practice account exists and costs nothing, and it lets you see the platform and the spreads without risking money. That is the place to start. The contract is a different instrument from a pawn, and the terms are the only description of it that matters.

FxPro is not licensed by the Securities and Exchange Commission of Sri Lanka. An account is opened with a company regulated outside Sri Lanka - the group is authorised by the FCA in the United Kingdom and CySEC in Cyprus - so a resident here deals with a foreign firm and the protections of a locally licensed one do not apply. Sending money abroad for trading is subject to the exchange control rules of the Central Bank of Sri Lanka. Nothing on this site is investment advice.