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HomeGlossaryContango

Contango

Contango, the opposite of backwardation, is a term that's used frequently in commodities markets. It refers to prices today being higher for a future delivery date than for an earlier delivery date.

For example, if the gold spot price (for T+2 delivery) is $1,550 per ounce and the price for delivery in 6 months is $1,600 per ounce, this market is "in contango".

This higher price for further "forward" delivery dates is due to a number of factors, but primarily it is the cost of financing and storing (known as "cost of carry") the commodity until the future delivery date arrives.