Spot gold versus futures-based gold at brokers

[Shadow Trader]

A gold CFD on a retail platform may be priced from spot gold, the over-the-counter market in London, or from COMEX futures. The difference isn't always disclosed prominently, and it shows up in behaviour.

Spot-based quotes track the interbank spot price, with no expiry and no roll. The overnight financing is determined by interest rates and lease rates. Futures-based quotes track a specific contract, include the cost of carry in the price, and roll on expiry, usually with a price adjustment.

Differences appear in spreads, in how prices behave around the roll, and in the swap or financing charged. Futures-based pricing can show a persistent gap from spot, narrowing as expiry nears.

For scalpers, the key is knowing which one is traded. A strategy backtested on one data source may behave differently on another. Gaps at the roll can cause surprise stop-outs.

The symbol description or contract specification normally states the underlying. If it doesn't, asking support is reasonable, and comparing the broker's quote with known spot and futures prices at a quiet moment settles it.

One more difference: stop levels and margin on CFD indices often change around the roll, and some brokers widen spreads in the days either side. Planning positions around the schedule avoids the worst of it.

Which pricing basis does the gold CFD use, and has the roll ever caused trouble?