By Jack Farchy and Elena Mazneva
Bloomberg News
Friday, June 12, 2020

(excerpts) An extreme dislocation in the global gold market earlier this year spurred banks to shift some positions out of New York futures and into the London over-the-counter market, according to a leading figure in the industry.

Market participants' changing behavior is reflected in gold trading volumes in the two hubs, said London Bullion Market Association Chief Executive Officer Ruth Crowell. The amount of gold traded in the U.K.'s capital surpassed the U.S. futures market in recent months, she said.

If it is sustained, the shift risks undermining the popularity of the gold contract on New York's Comex, which is owned by CME Group Inc. and is the world's leading venue for trading precious-metals futures and options.

In the meantime, the LBMA is exploring ways to make the London market more efficient following the dislocation, she said. That could include reviewing price discovery for the spot price, which until now has often been derived from Comex. The London Metal Exchange launched contracts for spot gold three years ago in a bid to take a slice of the world's top OTC market and provide an alternative to Comex. But the bourse's volumes are still just a fraction of the New York trade.

http://www.gata.org/node/20217