Spot gold in gold trading
Spot gold is the price for gold bought or sold for near-immediate settlement, usually two business days, as opposed to a futures price for later delivery.
Also called Spot price, Cash gold, Loco London
Spot gold is the price at which gold changes hands for prompt settlement, conventionally two business days after the trade. It is the reference price that XAUUSD charts, bullion dealers and news headlines are built on. The deepest spot market is the over-the-counter “loco London” market, where large bars are traded between banks and refiners under rules set by the LBMA.
How it applies to gold trading
Retail XAUUSD quotes track spot gold, but with two differences. First, a spread is added around the interbank price. Second, because a leveraged spot position is never actually settled, the platform charges or pays a daily swap to roll it forward. Over months those swaps add up, which is why long-term holders often compare the cost of a leveraged spot position against a futures contract or a physical purchase.
Spot and futures prices move together but are not identical. The difference, called the basis, reflects interest rates and storage costs until the futures delivery month. In normal conditions futures trade a little above spot (contango). As an illustration, if spot is $4,000 and the front-month futures contract is $4,020, the $20 gap is mostly the cost of carrying gold for that period.
A common mistake
Traders sometimes compare a spot chart against a futures chart and conclude one platform is “wrong” because the numbers differ by $10 to $30. Both are right; they are different instruments with different delivery dates.
See also: GC futures, Basis, LBMA, London fix.
Frequently asked questions
Where is the spot gold price set?
There is no single exchange. It emerges from over-the-counter dealing between banks, refiners and large traders, concentrated in London, with COMEX futures in New York providing the most visible price discovery during US hours.
Why does my platform's XAUUSD price differ from the spot price in the news?
Platforms add a spread and build their quote from several price feeds, so small differences of a few dollars are normal. A difference of tens of dollars usually means you are comparing spot with a futures contract.
Can I take delivery of spot gold from a trading platform?
On leveraged XAUUSD contracts, no. They are cash-settled products that follow the spot price; physical delivery requires a bullion dealer or an exchange’s delivery process.