Gold Market Places and Institutions
The gold market places of the world do not share a single trading floor. The gold price emerges from the interplay of several markets that are active at different times of day, so gold is traded practically around the clock.
The centre of the physical wholesale market is London. There, banks and dealers trade with each other over the counter (OTC), and settlement takes place through accounts ‘loco London’, meaning gold held in London vaults. New York is home to COMEX, the most important futures market: standardised gold futures are traded there, most of which are closed out before expiry and only a small share are settled by physical delivery. In Shanghai, the Shanghai Gold Exchange runs the central market for physical gold in China.
Three price terms come up again and again. The spot price is the current price for immediate delivery, which in the London market means settlement two business days after the trade. A future is a contract with a fixed delivery month; its price is usually slightly above the spot price, because financing and storage until the delivery date are priced in. Finally, the fixing is a benchmark price determined in an auction at set times – in London, the LBMA Gold Price at 10:30 and 15:00 London time.
If you follow the gold price in real time, you will usually see a spot price in US dollars per troy ounce. To convert it to a gram, divide the ounce price by 31.1035, because that is how many grams a troy ounce contains. For the euro price, apply the current exchange rate.
Alongside the market places, institutions shape the market: the LBMA sets the standards for bars and vaults in London, ICE Benchmark Administration runs the price auctions, the World Gold Council publishes the widely cited demand statistics, and the LPPM is responsible for platinum and palladium.
| Market place | Location | Type | Role |
|---|---|---|---|
| London gold market (LBMA) | London | Over-the-counter wholesale market (OTC) | Physical spot trading, vaults, Good Delivery standard |
| LBMA Gold Price (IBA) | London | Electronic price auction | Benchmark price at 10:30 and 15:00 London time |
| COMEX (CME Group) | New York | Futures exchange | Gold futures with physical delivery, price discovery during US trading hours |
| Shanghai Gold Exchange | Shanghai | Exchange for physical gold | China’s central market, Shanghai Gold Benchmark in yuan |
| London Precious Metals Clearing (LPMCL) | London | Clearing company | Settlement of London precious metals trades |
| London Platinum and Palladium Market (LPPM) | London and Zurich | Trade association | Good Delivery standard for platinum and palladium |
| World Gold Council | International | Association of the gold mining industry | Market research, Gold Demand Trends |
- LBMA: the London Bullion Market AssociationThe LBMA sets the standards for the London gold and silver market – from the bar specification to the code of conduct.
- LBMA Gold Price: the London gold fixingTwice a day, an electronic auction in London sets the most important benchmark price for gold – in US dollars, euros and pounds.
- COMEX: the gold futures market in New YorkGold futures are traded on COMEX in New York. They shape price discovery during US trading hours.
- Shanghai Gold Exchange: China’s gold exchangePhysical gold trading in China runs through the Shanghai Gold Exchange. It sets its own benchmark price in yuan.
- World Gold Council: association and data sourceThe World Gold Council represents gold miners and, with Gold Demand Trends, provides the most widely cited figures on supply and demand.
- LPPM: the London market for platinum and palladiumThe LPPM is to platinum and palladium what the LBMA is to gold and silver: it sets the standards for bars and trading.
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