Glossary
Spot price
The price for buying or selling a commodity, currency or other asset for immediate delivery, as opposed to a futures price for a later date.
On this page
The spot price is what an asset costs right now for immediate delivery. When a news report quotes "gold at $X an ounce" or "the euro at $1.1X," it is usually a spot price. The term matters most in markets where people also trade contracts for future delivery, because the gap between spot and futures prices carries information about storage costs, interest rates and expected supply.
How it works
"Immediate" means within the market's normal settlement window, not literally this second. Spot foreign exchange typically settles two business days after the trade (one for a few pairs, such as US dollar against Canadian dollar). For commodities, the spot price is often taken from the nearest-dated futures contract or from dealer quotes in the physical market.
A futures price is linked to spot by the cost of carry: the financing, storage and insurance needed to hold the asset until the delivery date, less any income it produces.
Contango and backwardation
When futures trade above spot, the curve is in contango, normal for gold. When nearby supply is tight, as can happen in crude oil, futures can trade below spot, called backwardation. This matters for commodity ETFs that hold futures rather than the physical asset: their returns can drift far from the spot price over time because of the cost or gain of rolling contracts.