one could argue that you should not use a leverage that is higher than your total capital, but then i would say, what is the point of it, if i can just use my own capital(raising my investment to match the possible leverage) instead
The point is that you don't
actually use all your capital, you
limit your exposure to risk while "taking advantage of the tiny spread". At the same time, you can invest the bigger part of your capital (which is still available to you because of leverage in gold) in some safe instrument which is
negatively correlated to gold, e.g. in US Treasuries...
Thereby your expectation of reward is higher than if you just bought gold with all your capital while
risk remains the sameone can do the same thing without leverage, putting a % in one risky asset and the other in a more safe ones, without risking to cut the money in the more safe asset in the case your risky asset will goes wrong
if the majority of your money are on the safe asset, then it does not matter anymore if the spread is tiny or not, you can go ahead and trade normally with your capital, because the real money will come from the safe ones