Spot gold
Family I · Instruments
Not to be confused with cfd on gold.
Spot gold is the market for buying or selling gold for near-immediate delivery, as opposed to a dated futures contract. It is quoted as a price per troy ounce, usually against the US dollar under the symbol XAU/USD, and trades over the counter through a dealer network rather than on a single central exchange. The quoted price reflects the metal itself, not a derivative wrapped around it.
How the spot price is formed
The spot price is set by continuous over-the-counter dealing among banks, refiners and brokers, with the London market acting as the historical reference point. Because there is no single exchange order book, quotes can differ slightly between venues, and the spread between bid and offer widens when liquidity thins.
Two features distinguish the spot market from most listed markets:
- Delivery is expected within a short standard settlement window, typically two business days, rather than at a fixed future date.
- There is no expiry, so a position can be held indefinitely, though holding costs such as financing or storage may apply depending on how the exposure is taken.
Retail access to spot gold is usually indirect: a broker may quote XAU/USD as a CFD on gold rather than arranging physical delivery.
Worked example: converting a spot quote to contract value
Spot gold is quoted per troy ounce. A standard contract size of 100 troy ounces is common, but the size varies by venue and product, so the figure below is illustrative.
The key row shows why position sizing matters: a one-dollar move in the gold price changes the value of a 100 oz position by 100 USD, before any costs.
Spot versus other gold exposures
Spot gold is one of several ways to take gold exposure. Futures and forwards fix a price for a future settlement date and carry an expiry. Allocated physical holdings give direct ownership of bars or coins, with storage and insurance costs. ETFs hold bullion or bullion-linked assets and trade like shares.
The spot market is the reference price that these other instruments are usually priced against, which is why a futures price will sit above or below spot depending on interest rates and storage costs.
Often confused with
- cfd on gold
- A CFD on gold is a derivative contract that tracks the spot price without transferring the metal, so no delivery ever occurs; the visible sign is that the contract has a financing charge and no settlement date, whereas spot gold implies delivery of the metal.