What Are Troy Ounces, Spot Gold, and Gold Futures? Units and Trading Methods Explained [EN]
ECONOMIC TERMS
In international gold markets, a troy ounce is a unit of weight, spot gold is the market for gold traded at today’s price, and gold futures are contracts that set settlement terms for a future date. Once you know the difference, it becomes much easier to understand everything from news reports quoting gold “per ounce” to why spot and futures prices do not always match.
- 1 troy ounce
- 31.1034768g
- International precious-metals weight unit
- KRX spot gold
- 1g
- Trading and quotation unit
- KRX gold futures
- 100g
- Trading unit per contract
1. What Is the Difference Between a Troy Ounce, Spot Gold, and Gold Futures?
These three terms do not describe the same kind of thing. A troy ounce tells you how much gold weighs, while spot and futures tell you the terms under which it is traded.
| Term | What it is | In simple terms |
|---|---|---|
| Troy ounce | A unit of weight for precious metals | A ruler for measuring how much gold there is |
| Spot gold | A trade made at the current gold price and settled shortly afterward | The market for buying and selling gold now |
| Gold futures | Exchange-traded contracts with standardized terms for future settlement | A market for trading agreements tied to a future gold price |
For example, if gold futures are quoted at “$4,000 per troy ounce,” the troy ounce is the unit of weight used to quote the price, while the gold future is the type of contract carrying that price. You need to separate the unit from the way the product is traded.
2. What Is a Troy Ounce, and How Many Grams Is It?
A troy ounce is a traditional unit used to weigh precious metals such as gold, silver, and platinum. The London Bullion Market Association (LBMA) gives the following exact conversion.
The most common mistake is treating a troy ounce as the same as the standard ounce used for everyday goods. According to conversion tables from the U.S. National Institute of Standards and Technology (NIST), a standard avoirdupois ounce is about 28.34952g, while a troy ounce is about 31.10348g. Despite the similar name, a troy ounce is roughly 9.7% heavier.
| Starting unit | Grams | Troy ounces | Korean don |
|---|---|---|---|
| 1 troy ounce | 31.1034768g | 1oz t | About 8.2943 don |
| 1 don of pure gold | 3.75g | About 0.1206oz t | 1 don |
| 1kg | 1,000g | About 32.1507oz t | About 266.6667 don |
Troy-ounce and don figures in the table are rounded. “Oz” on a trading screen often means a troy ounce when the product is gold, but checking the contract specifications is still the safest approach.
3. How to Convert International Gold Prices Into KRW per Gram and KRW per Don
International precious-metals prices are usually quoted in U.S. dollars per troy ounce. To convert that figure into the more familiar Korean won per gram, first divide by 31.1034768 to get dollars per gram, then multiply by the KRW/USD exchange rate.
An Example for Illustration, Not a Current Market Quote
To make the math easy to follow, assume an international gold price of $3,110.35 per troy ounce and an exchange rate of KRW 1,400 per U.S. dollar.
- $3,110.35 ÷ 31.1034768g ≈ $100/g
- $100/g × KRW 1,400/USD ≈ KRW 140,000/g
- KRW 140,000/g × 3.75g ≈ KRW 525,000/don
This is a simple conversion that reflects only the international price and the exchange rate. Actual prices in Korea may also include domestic supply and demand, bid-ask spreads, fees, taxes, gold-bar fabrication costs, and distribution costs, all of which vary by product. That is why a jewelry store’s price for one don of gold may not line up neatly with the converted international price.
4. What Is Spot Gold? Do You Receive Gold Right Away?
A spot gold trade means buying or selling gold at the current market price, with the cash and gold settled on a nearby date according to market practice. The LBMA’s guide to the London over-the-counter market describes two business days after the trade date as the standard spot settlement date.
The key idea behind spot trading is therefore the current price and near-term settlement, not receiving a gold bar the moment you click the order button. In some markets, the gold remains with a professional custodian while only ownership or the account balance changes.
The KRX Gold Market Is Korea’s Main Spot Gold Market
The Korea Exchange operates the KRX Gold Market as a spot market. As checked on August 23, 2026, the market trades 1kg and 100g gold bars with a purity of 99.99%, but investors can place orders in 1g units through a spot gold account at a securities firm. Gold purchased on the market is held by the Korea Securities Depository, and physical withdrawals are available in units of 100g or 1kg.
In simple terms, buying 1g does not mean a 1g piece of gold is shipped to you. You can trade in 1g units in your account, but withdrawing an actual gold bar requires a larger minimum amount and comes with value-added tax and withdrawal fees. According to the Korea Exchange, exchange trading is exempt from VAT, but physical withdrawals are subject to 10% VAT and related fees.
5. What Are Gold Futures? Are They Simply Bets on a Future Gold Price?
Gold futures are standardized contracts whose size, price unit, contract month, last trading day, and settlement method are set in advance by an exchange. Buyers can gain exposure to rising gold prices, while sellers can gain exposure to falling prices. Companies that produce or use gold can also use futures to hedge against price swings.
It is misleading to think of a futures price as nothing more than the market’s agreed prediction of where gold will trade later. A futures price reflects not only today’s spot price but also financing costs through expiration, storage and insurance costs, and market supply and demand. Expectations about the future matter, but they are not the only factor.
How KRX Gold Futures Are Structured
KRX gold futures use gold with a purity of at least 99.99% as the underlying asset. Each contract represents 100g, and prices are quoted in Korean won per gram. On the last trading day, the difference is cash-settled using the closing price of the KRX Gold Market’s 1kg product. In other words, holding the contract to expiration does not result in receiving a 100g gold bar.
COMEX Gold Futures Come in Different Contract Sizes
Among CME Group’s COMEX gold futures, the standard GC contract represents 100 troy ounces, Micro Gold futures (MGC) represent 10 troy ounces, and 1-Ounce Gold futures represent one troy ounce. Contract sizes and physical or cash settlement methods vary even among gold futures, so always check the ticker symbol and contract specifications first.
| Product | Contract size | Price quotation | Final settlement |
|---|---|---|---|
| KRX Gold Futures | 100g | KRW/g | Cash settlement |
| COMEX Gold GC | 100 troy ounces | USD/troy ounce | Physical delivery available |
| COMEX Micro Gold MGC | 10 troy ounces | USD/troy ounce | Physical delivery structure |
| COMEX 1-Ounce Gold | 1 troy ounce | USD/troy ounce | Cash settlement |
Exchange specifications can change. Before trading, check the latest contract specifications from both your broker and the relevant exchange.
6. The Difference Between Spot Gold and Gold Futures
| Category | Spot gold | Gold futures |
|---|---|---|
| What is traded | Gold now and ownership of it | A standardized contract for future settlement |
| Price basis | Current supply and demand | The spot price plus costs and expectations through expiration |
| Funds required | Generally the purchase price plus trading costs | Margin that is smaller than the full contract value |
| Expiration | None | A contract month and last trading day |
| Profit and loss | A trading gain or loss is realized when the gold is sold | Daily mark-to-market adjustments flow through the margin account |
| Physical delivery | May be available, depending on the market and product | Physical delivery or cash settlement, depending on the contract |
| Main risks | Gold prices, exchange rates, storage, and trading costs | Gold prices, exchange rates, leverage, margin, expiration, and rollover |
Spot trading is generally better suited to holding gold, while futures are more commonly used to gain price exposure or hedge the risk of an existing gold position. But spot gold still carries storage, currency, and price risks, while futures traders must maintain enough margin to avoid forced liquidation. Neither can simply be described as safe.
7. Why Can Futures Control a Large Position With Less Money?
With futures, you do not pay the full contract value upfront. Instead, you post margin as collateral to guarantee that you will meet your obligations under the contract. The U.S. Commodity Futures Trading Commission (CFTC) explains that futures margin is not a partial payment toward a purchase, but a performance bond for fulfilling contractual obligations.
Suppose a gold futures contract is worth KRW 10 million and requires KRW 1 million in margin. If the gold price moves by 2%, the profit or loss on the contract would be about KRW 200,000. That is 2% of the contract value, but 20% of the KRW 1 million posted as margin. A move in the opposite direction magnifies the loss by the same ratio.
Futures positions are marked to market every day, and gains or losses are reflected in the account. If the account falls below the maintenance margin level, the trader may be required to deposit more money or have the position liquidated. So saying that “the margin is small” does not mean you are buying gold cheaply. It means you are taking on a large amount of price risk with a relatively small amount of your own money.
8. Why Do Spot and Futures Prices Differ?
Buying gold today and holding it into the future comes with financing, storage, and insurance costs. All else being equal, a futures contract with time left until expiration may therefore trade above the spot price. The Korea Exchange also explains the theoretical price of gold futures using the spot price, the forward interest rate, time to expiration, and storage costs.
Contango and Backwardation
- Contango: Futures trade above the spot price. This often occurs when carrying costs such as financing, storage, and insurance are reflected in the price.
- Backwardation: Futures trade below the spot price. This can occur when immediate demand for physical gold is strong or near-term supply is tight.
As expiration approaches, the gap between spot and futures settlement dates narrows, so the two prices tend to converge. If they did not, traders could buy one and sell the other to capture an arbitrage opportunity.
9. Seven Things to Check on a Gold Price Screen
- Unit: Is the price per troy ounce, gram, kilogram, or Korean don?
- Currency: Is it quoted in U.S. dollars or Korean won?
- Product: Is it physical spot gold, KRX spot gold, an ETF, a CFD, or a futures contract?
- Contract size: How many grams or troy ounces of gold does one futures contract represent?
- Settlement method: Does the contract use physical delivery or cash settlement?
- Expiration: What is the last trading day, and will you need to roll the position into the next contract month?
- Costs and risks: What are the fees, spread, currency exposure, taxes, margin requirements, and forced-liquidation terms?
Two products described as “gold investments” can have completely different profit-and-loss structures when these details differ. In particular, you need to know whether the number on the screen is the price of one gram of gold or the total value of one futures contract before you can calculate your actual exposure.
10. Frequently Asked Questions
How many Korean don are in one troy ounce?
One troy ounce is 31.1034768g, while one don of pure gold is 3.75g. That makes one troy ounce equal to about 8.2943 don.
If I buy 1g of spot gold, can I receive a 1g gold bar?
It depends on the market and product. The KRX Gold Market lets investors trade in 1g units, but physical withdrawals are made in units of 100g or 1kg and are subject to VAT and fees.
Will I receive gold if I hold a gold futures contract to expiration?
It depends on the contract. KRX gold futures settle the difference from the final settlement price in cash. Some COMEX gold futures are structured for physical delivery, but the actual procedures, eligibility requirements, and costs are governed by the exchange and broker’s rules.
If futures trade above spot, does that mean gold prices will rise?
Not necessarily. Futures prices reflect interest rates, storage and insurance costs, and the time remaining until expiration. Contango can simply result from the cost of carrying gold, rather than an expectation that spot prices will rise.
Does a gold ETF invest in spot gold or gold futures?
It depends on the product. Some ETFs hold physical gold, while others invest in gold futures. Do not judge the structure just because “gold” appears in the name. Check the prospectus for the underlying asset and tracking method.
Bottom Line: Start by Separating the Unit From the Product
A troy ounce is a precious-metals weight unit equal to 31.1034768g. Spot gold is traded at the current price and settled shortly afterward, while gold futures are standardized contracts for settlement at a future date. The starting point is to remember that one is a unit and the other two are ways of trading.
When reading international gold prices, convert U.S. dollars per troy ounce into Korean won per gram. When choosing an actual product, check the contract size, whether you own physical gold, the expiration date, settlement method, and margin requirements. Before trying to predict where gold is headed, make sure you know exactly what the number on your screen is pricing.
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