LBMA: Gold Trade Shifted From New York to London

SEATTLE (Scrap Monster): The London Bullion Market Association (LBMA) denotes that there has a visible shift in gold trading from New York to London recently. This is quite evident from the gold trading volumes of both the hubs, said Ruth Crowell, Chief Executive, LBMA.

The air traffic disruptions on account of lockdowns to counter coronavirus pandemic made it nearly impossible for traders to transport gold to New York for delivery against future contracts upon maturity. As a result of this unprecedented development, the futures soared to a premium of up to $70 per ounce.

The disorder resulted in huge losses for major banks including JPMorgan Chase & Co., HSBC Holdings Plc, and UBS Group AG. For instance, the market-to-market loss in a single day for HSBC was estimated at around $200 million.

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According to LBMA data, the volumes of swaps and forwards used for hedging purposes in replacement of Comex futures have recorded significant jump. The relative volumes have hit the highest level since November 2018. The record gold trading volume of 67 million ounces on May 26^th underscores the shift in positions into the London market by traders.

Meantime, the LBMA is reportedly exploring ways, including review of spot price discovery mechanism, to make London market more attractive to investors as well as traders, Crowell added.