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Online Gold Trading
السلام عليكم!
I have asked different questions in the past one year regarding online trading of gold on this platform, I was told that it is permissible and all my questions were well answered. I thank the whole team of Ask Ghamidi for that.
But, now I have one more question regarding this and that is:
As we know that gold is always traded online in pair, which is Gold & USD denoted by XAUUSD, therefore, my question is that this pair has both USD & Gold, which means that the fluctuations in USD price and gold price has a direct effect on this pair. The question I’m trying to ask is that interest on USD in international market plays a vital role in the price of USD, therefore, if we trade this pair and the interest rate on USD increases the value of USD increases which decreases the value of gold as they both are indirectly proportional to each other and vice versa. So, if I sell a lot of this pair I would now want that the USD value should increase so that the gold value gets decreased and I can earn profit from this trade, which means that the interest being one of the factors that influence the value of USD should be increased in order to increase the value USD in the market and ultimately decreasing the value of gold due to their indirect proportionality. Now what I earned if not all then some portion of my earnings is due to the increase of interest rate on USD, so will this earnings be halal as it was earned due to the influence of interest rates on USD?
Thanks a lot.
جَزَاكَ ٱللَّٰهُ خَيْراً کثیراً.
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5 Replies
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Online Gold Trading
updated 3 weeks, 3 days ago
3 Members
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5
Replies
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As historically gold was considered a currency, it is still traded on the foreign exchange (Forex) under symbols like XAUUSD, even though it is no longer considered a currency. If you strictly want to trade gold without pairing it with USD, you can always trade ETF’s like GLD and IAU.
With that said, religiously you are not responsible for the international monetary system and how interest affects values or prices of currencies or commodities. For us riba has been deemed haram and it is only a consideration in loan transactions. Since trading gold is a business transaction and not a loan transaction, there is no harm in trading gold on the Forex.
For details about riba, please see:
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السلام عليكم!
I have asked a question below, kindly reply.
Thank you!
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Assalāmu ʿalaykum. I would like to ask one more question regarding this.
Many brokers state that they do not bid or trade against the trader, and that their income is earned through spreads or commissions. However, it is also stated that the broker operates on a hybrid execution model, where on certain account types the broker may internally provide liquidity rather than routing every order to external liquidity providers.
My concern is: even if the broker claims they do not intentionally bid against the trader, or even if they are doing it in secret, does this hybrid or market-maker–style execution mean that the broker effectively becomes the counterparty? If so, does this create impermissible elements such as conflict of interest, gharar, or unfair advantage from an Islamic perspective?
I would appreciate your guidance on whether trading under such a model is permissible or should be avoided.
JazākAllāhu khayran.
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This issue is primarily problematic from the broker’s perspective, not the trader’s.
In principle, a transaction is not prohibited merely because it is modern, digital, or non‑physical. What matters is whether the arrangement contains deception, unjust enrichment, or prohibited elements such as riba. If a transaction is free from these defects, and if industry norms eliminate the original reasons for earlier prohibitions, such as preventing fraud, then the transaction can be permissible.
Application to the hybrid model
• If the broker openly acts as the counterparty, and this is fully disclosed, with fair pricing and honest execution, then the arrangement is simply a bilateral trade between consenting parties. That, in itself, does not make it impermissible.
• The real problem arises when the broker hides its role as counterparty, manipulates prices, front‑runs, or exploits client information to gain an unfair advantage. These practices introduce deception and unjust enrichment, making the arrangement impermissible. In such cases, the prohibition applies to the broker—unless the trader knowingly participates in the deceptive setup.
• Gharar becomes a concern when essential terms, the subject matter, or the nature of execution are unclear or misrepresented. If the broker’s model creates genuine uncertainty about pricing, execution, or ownership, that is problematic. If the model is transparent and the trader clearly understands the nature of the contract, the level of gharar is significantly reduced.
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Salam @Umer25 bhai . Could you please provide an answer when you have a moment?
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