Answer :
Futures prices above the spot price can be a signal of higher prices in the future, particularly when inflation is high.
What is spot price?
Spot prices are typically used as a benchmark when evaluating the cost of commodity futures contracts, such as those for oil, wheat, or gold. This is explained by the fact that stocks always trade at spot. A stock must be purchased or sold at the advertised price in order to be exchanged for cash.
The price of a futures contract is frequently determined using the spot price of a commodity, predicted changes in supply and demand, the risk-free rate of return for the holder of the commodity, and the costs of transportation and storage in relation to the contract's maturity date. Futures contracts with longer maturities often have greater storage costs compared to contracts with short expiration dates.
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