In this paper, we report the discovery of a high‐energy component of the X‐ray spectra of U Gem, which can be observed while the source is in outburst. We used Chandra and XMM–Newton observations to compare the quiescence and outburst X‐ray spectra of the source. The additional component may be the result of the reflection of X‐rays emitted from an optically thin plasma close to the white dwarf, from the optically thick boundary layer during the outburst. Another possible explanation is that some magnetically channelled accretion may occur on to the equatorial belt of the primary causing shocks similar to the ones in the intermediate polars as it was suggested by Warner and Woudt. We have also found a timing structure at about 73 mHz (∼13.7 s) in the RXTE observation, resembling dwarf novae oscillations.