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The spot price of gold is the price for immediate delivery - what you pay (or receive) to buy or sell gold now. The futures price is the price agreed today for delivery at a specific future date. In normal market conditions, futures prices are slightly higher than spot prices, reflecting the cost of storing and financing gold until delivery.
For most UK retail investors, the spot price is the relevant figure. But understanding the relationship between spot and futures helps explain why the gold price moves during hours when UK markets are closed, and why gold ETF prices can drift from the spot price over time.
At a glance
| Spot price | Futures price | |
|---|---|---|
| Delivery | Immediate (T+2 settlement) | Specified future date |
| Market | OTC interbank / LBMA | COMEX (CME), LME |
| Price vs spot | The reference price | Usually higher (contango) |
| Main users | Dealers, central banks, retail buyers | Miners, funds, speculators |
| Real-time? | Yes | Yes |
What is the spot price?
The gold spot price is the current market price for one troy ounce of gold for immediate delivery, settled within two business days (T+2).
It is not a single exchange price - it emerges from continuous OTC trading between banks, dealers, and institutions globally. The LBMA Gold Price auction twice daily sets a widely-used benchmark, but spot is available and moving 23 hours a day.
When UK bullion dealers quote “spot” in their pricing, they mean the current live interbank market price - usually in USD per troy ounce, converted to GBP at the current exchange rate.
What is the futures price?
A gold futures contract is an agreement to buy or sell a specific quantity of gold at a fixed price on a future date - typically three months, six months, or a year ahead.
The main gold futures market is COMEX (part of the Chicago Mercantile Exchange). The most actively traded contract is the front-month contract - the nearest upcoming delivery date.
Most futures contracts are not settled by physical delivery. They are closed out (sold) before the delivery date, with only the price difference changing hands. This is why futures can be held by investors who have no intention of taking or making delivery of physical gold.
Why futures prices are usually higher than spot (contango)
In normal conditions, gold futures trade at a premium to spot. This state is called contango.
The premium reflects:
- Cost of carry: The interest cost of financing a gold position over time. If you could earn 5% by holding cash, storing gold for six months instead costs you that 5% in foregone interest.
- Storage costs: Gold has to be stored somewhere. Futures prices incorporate the expected storage cost to delivery date.
The formula is roughly: futures price ≈ spot price × (1 + risk-free rate + storage cost) for the period to delivery.
At 5% interest rates and 0.25% annual storage costs, a six-month futures contract might trade at roughly 2.5–3% above spot.
When futures trade below spot (backwardation)
Occasionally, gold futures trade below spot. This is called backwardation and typically signals physical scarcity or very high near-term demand for immediate delivery.
It happened briefly in March 2020 when COVID-19 disrupted Swiss refinery operations and physical delivery of standard contract specifications (100 oz bars to New York) became constrained. The COMEX futures price fell below the London spot price, creating an unusual arbitrage opportunity that lasted until supply normalised.
Persistent gold backwardation is rare. When it occurs, it usually signals genuine near-term physical tightness.
How futures prices affect gold ETFs
Physically-backed gold ETCs (like iShares Physical Gold, IGLN) hold actual gold in vaults. Their price tracks the spot price closely, minus the annual management fee.
Futures-based gold products - less common in the UK retail market - face the “roll cost” problem: when a futures contract nears expiry, the position must be rolled to the next contract, and in contango that means buying a more expensive contract each time, which erodes returns gradually.
UK investors predominantly access gold ETFs through physically-backed products, which don’t have roll costs. But if you’re using any gold product, it is worth checking whether it is physically backed or futures-based.
Why gold moves when UK markets are closed
Gold trades globally: Asia opens first, then London, then New York overlaps with London, then New York continues after London closes.
Overnight price moves - driven by US Federal Reserve announcements, Chinese economic data, geopolitical events - happen in the COMEX futures market, which is open when the London OTC market is not.
When UK dealers open the next morning, their prices will reflect the overnight COMEX moves. This is why you might see a significantly different gold price on a Monday morning compared to Friday’s close - weekend geopolitical events show up in Sunday evening Asian trading.
What UK retail buyers need to know
For buying physical gold from a UK dealer, the relevant figure is the live spot price, not the futures price. Dealers typically price their coins and bars as spot plus a percentage premium.
The futures price is worth knowing because:
- It tells you the market’s current expectation of the near-term gold price environment
- Large divergences between spot and futures can signal market stress
- It explains why COMEX moves overnight affect your dealer’s prices the next morning
Tax and regulation
No direct tax implications: The spot/futures distinction is a pricing question, not a tax question for retail buyers. CGT applies on disposal of physical gold (except CGT-exempt UK legal tender coins). Gains on COMEX futures contracts would be treated differently - as financial instruments rather than physical assets.
FCA authorisation: COMEX is a US-regulated exchange. Trading gold futures directly is not a common route for UK retail investors and would typically require an FCA-authorised broker.
Frequently asked questions
Is the spot price the price I actually pay? Not quite. UK bullion dealers add a premium to spot to cover minting costs, dealer margin, and supply factors. The premium on major bullion coins is typically 3–8% over spot in normal market conditions.
Why does the gold price quoted on different websites vary slightly? Spot price feeds come from different data providers and update at slightly different times. Small differences (a few pence per ounce) are normal. Larger differences between sites may reflect one site showing a delayed price or a different fix reference.
What is COMEX and should I trade it? COMEX is the main US gold futures exchange. It sets a major part of global price direction. Trading COMEX futures requires a specialist futures broker and involves margin requirements - it is not comparable to buying a physical coin from a bullion dealer. Most UK retail investors have no reason to trade COMEX directly.
Can I get a worse price by buying at the wrong time of day? Within a normal trading day, yes - spot price moves, and buying during a price spike can mean paying slightly more than you would have an hour earlier. Dealer prices update in real time or at short intervals. For long-term investors, timing intraday moves rarely changes outcomes materially.