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Derivatives

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  • February 11, 2021
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Forwardation

A pricing structure in securities, foreign currencies and commodities trading wherein the prices of far future deliveries exceed those of near future deliveries. Forwardation occurs when demand for later delivery is higher than demand for early delivery. For example, if the gold price quotation for February delivery is $1290 per ounce, and that for August delivery is $1300 per ounce, then the forwardation for six months against February is $10 per ounce.

Forwardation is also referred to as contango.


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