What "Settlement Price" Actually Means, and Why It Is Not the Same as the Closing Price

If you have spent any time reading exchange documents, you have seen the phrase "settlement price" and probably assumed it meant "the price at the close." It does not, quite. The distinction matters when you are comparing a headline figure from one exchange with a headline figure from another, and it matters when you are trying to reconcile a broker statement with what the exchange website shows.

A settlement price is the number the exchange itself computes and publishes for each contract each trading day, for use in margining, in mark-to-market calculations, and in cash settlement of expired contracts. It is a single official number per contract per day.

The closing price, in contrast, is simply whatever price prevailed at the moment the exchange session ended. On many days these two numbers are identical, or nearly so.

On the days when they differ, the difference is real and consequential.

How exchanges compute settlement varies. At the COMEX, the settlement price for the active gold and silver contracts is a volume-weighted average of trades executed during a short defined settlement period at the end of the pit session — roughly the last two minutes for gold.

If those minutes were quiet, the settlement is close to the last trade; if there was a large late order, the settlement may be materially different from the very last print. At MCX in India, settlement uses a similar VWAP over the last thirty minutes of the evening session, which is designed to be less manipulable but produces a number that can differ from the close in fast markets.

At SGE, the settlement calculation for Au9999 uses the weighted average price of the day, not just the closing period. Each exchange documents its own method; the methods are not interchangeable.

The practical implication is that if you record "closing price" on Monday from your terminal, and compare it to the "settlement price" on the exchange's daily report, you can find yourself explaining a discrepancy of several dollars per ounce even when nothing has gone wrong. On this site we use settlement prices where the exchange publishes them, because settlement prices are what appear in the exchange's own reference documents and what appear on statements from clearing brokers.

It also means our stored series are more likely to reconcile against exchange records at audit time.

Two other terms worth distinguishing from settlement: the reference price used in some option-valuation contexts (often the same as settlement, but not always), and the fixing price used in the LBMA gold and silver auctions (which is a wholly different mechanism — a periodic auction rather than an end-of-session calculation). Fixing prices, settlement prices, and closing prices are three different things that live in adjacent parts of the same market.

Getting them straight is one of the small acts of care that separates a data source that can be trusted from one that cannot.