How Gold Is Priced: Spot, Futures & Premiums
"The gold price" is one number, but you will never buy gold at exactly that number. Here is how the layers stack up.
Layer 1: the spot price
Spot is the market's live consensus for immediate delivery of one troy ounce of standard bullion. It is the reference point every other price builds on — see What Is Spot Gold? for how it's formed.
Layer 2: futures prices
Futures contracts trade for delivery months ahead. Their price roughly equals spot plus the cost of carry — financing, storage and insurance until delivery. When financing rates are high, futures trade further above spot ("contango"). Futures are so liquid that headlines often quote them, but they are a derived price, not a different gold.
Layer 3: wholesale bullion
Refiners cast bars in standard sizes ("good delivery" 400-oz bars, kilobars, 100-oz bars) that trade among banks, refiners and big dealers at small markups over spot. This wholesale tier is where most physical metal changes hands.
Layer 4: retail — where premium lives
What you pay at a dealer = spot + premium. The premium is not pure profit; it stacks up through the chain:
- Fabrication — minting a coin or casting a bar costs money, and collectible designs cost more.
- Distribution — transport, insurance and secure storage are priced in.
- Dealer margin — the shop's overhead and profit.
- Demand — in buying frenzies premiums expand sharply; in quiet markets they compress.
Typical patterns: 1-kilo and 100-oz bars carry the lowest premiums; popular 1-oz coins mid-range; fractional coins (1/2 oz, 1/4 oz, 1/10 oz) the highest per-ounce premiums; proof and collector coins are a market of their own.
When you sell
Dealers buy back at spot minus a spread, which is usually smaller than the premium you paid. That gap — premium in, spread out — is the hidden round-trip cost of physical gold, and it is why "buy at spot, sell at spot" is never quite true. It also explains why flipping physical gold quickly usually loses money even when the spot price is flat.
Quick rules of thumb
- Bigger bars = lower premium per ounce; more divisibility = higher premium.
- Recognized bullion coins resell easiest, so their spreads tend to be tight.
- Always ask for the price over spot when comparing dealers.
- Use our gold calculator to check the melt value behind any quote, and see karat purity to decode fineness stamps.