Two screens, the same metal, two prices. Spot gold prints at one level. The June futures contract prints higher. Nothing is broken. The futures price contains the cost of holding the metal until June: financing, storage, insurance. Take the spot price, add the cost of carry, and you land close to the futures price. That single relationship explains most of what separates the two markets.
Spot means settlement now, or as close to now as the market convention allows. In FX, spot settles two business days out for most pairs. Nobody in a retail account ever settles anything, because the position is rolled forward every night instead. Futures mean settlement on a fixed date at a fixed price, agreed today, on a contract with a standard size defined by the exchange.
Where the cost of holding a position shows up
In a spot account the holding cost arrives nightly as a swap or rollover charge. The broker closes your value date and opens a new one, and the interest rate differential between the two currencies, plus the broker's own markup, is debited or credited to your account. Hold a position for two months and you pay roughly sixty of those charges. They are small enough individually to ignore and large enough together to change the arithmetic of a swing trade.
Futures charge nothing overnight. The carry was priced into the contract on the day you bought it. If you buy June gold in March at a premium to spot, and gold has gone nowhere by June, the futures price converges down to spot and you lose the premium. That is the same money, collected in a different way. This is why comparing a futures commission with a spot spread and declaring one cheaper is usually wrong.
The one case where futures carry can turn in your favour is backwardation, when the near contract trades above the far one. That happens in physical markets under supply stress, and it shows up in oil more often than in metals. If you trade energy, read how the oil contracts are structured before assuming a long position behaves like a long position in a currency pair.
Expiry is the thing that catches people out
A futures contract has a last trading day. After that it either settles in cash against a reference price or, on physically settled contracts, obliges delivery. Retail brokers close or roll client positions before that point, and the roll is not free: you exit one contract and enter the next at a different price. Traders who set a stop loss and walk away for six weeks come back to a position that has been rolled twice, with a cost basis that no longer matches the chart they remember.
Spot positions have no expiry. That is the practical reason most retail platforms quote continuous spot instruments even for products whose underlying market is a futures contract, indices and energy included. The platform builds a continuous price series and charges the carry nightly rather than making the client manage a calendar.
Continuous charts on spot instruments hide the roll. When a backtest on a continuous index chart shows a clean multi-month trend, part of that move may be roll adjustment rather than tradeable price. Test long-horizon systems against the funding you would actually have paid.
Contract size, margin and who each market is built for
Futures contracts come in fixed sizes set by the exchange. That is fine for a fund and awkward for a small account, because the smallest tradeable unit may already be more risk than the account should carry. Spot instruments are quoted in lots that divide down to fractions, which lets a trader size a position to a specific risk figure rather than to whatever the exchange decided.
Margin also works differently. Exchange futures margin is set by the clearing house, published, and revised when volatility moves. Spot margin at a broker is a function of the leverage the broker grants, which is capped by its regulator and varies by jurisdiction. The exchange number is transparent and applies to everyone. The broker number depends on where you and the broker are.
Counterparty structure is the other split. A futures trade faces a central clearing house that stands between buyer and seller. A spot CFD or rolling position faces the broker itself, and the quality of that broker is the risk. Anyone weighing the two should understand what a licence actually guarantees and what it does not, because that is the real difference in default risk, not the instrument.
What this means when you pick an instrument
For a trader holding positions for hours or days, the spot instrument is almost always the better fit: finer sizing, no expiry admin, and a nightly carry cost small enough not to dominate the outcome. For positions measured in months, the arithmetic tightens, and paying carry sixty times in a row deserves a look before the trade rather than after it.
What matters more than the choice is knowing which one your account is actually trading. A platform that labels an instrument "Gold" tells you nothing about whether the underlying reference is spot bullion or a futures contract, when it rolls, or how the carry is calculated. On the platforms we build, that information sits on the instrument itself, because a trader who cannot see the funding basis of a position cannot price the trade properly.
Both markets are leveraged, and both can lose more than the initial margin in a fast move. The instrument you pick changes how the costs reach you. It does not change the risk.
"Traders ask which is cheaper, spot or futures. The honest answer is that you pay either way. In spot you pay nightly and never notice. In futures you paid the whole thing up front, inside the contract price."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- Futures prices carry the cost of holding a position until expiry inside the price; spot accounts charge the same cost nightly as a swap.
- Every futures contract expires, and rolling into the next one changes your cost basis, which breaks stops and long-horizon backtests.
- Exchange futures margin is published by the clearing house; spot margin depends on the broker's licence and your jurisdiction.
- Retail-sized accounts usually fit spot instruments better because position size divides finely instead of being fixed by contract specification.
Frequently Asked Questions
Is spot trading cheaper than futures?
Not automatically. Spot accounts pay a nightly swap and a spread; futures pay the carry once, priced into the contract, plus commission. Over a short hold spot usually costs less, and over several months the two converge. Compare total cost for your actual holding period rather than one line item.
What happens if I hold a futures position to expiry?
Retail brokers close or roll the position before the last trading day, so you are not asked to take delivery. The roll moves you into the next contract at a different price, which changes your entry level and can make a stop or target sit in the wrong place.
Why does the gold futures price differ from the spot gold price?
Because a futures price includes financing, storage and insurance until the settlement date. As expiry approaches, the futures price converges towards spot. A wider gap normally reflects higher interest rates rather than a different view on gold.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.