When the Dutch central bank transferred over 78 tonnes of gold from New York to London last month, it praised the city as “the world’s most easily tradeable gold” market. The move reflects a broader trend: central banks are diversifying reserves away from US government bonds and bringing bullion closer to home since Russia’s assets were frozen after the 2022 invasion of Ukraine.
London’s gold holdings in vaults have risen steadily, reaching nearly 10,000 tonnes worth $1.3tn last month. Gold returned to London after banks and hedge funds shifted bullion to New York in response to rising prices and tariff concerns. The Bo E’s reputation as a safe custodian, plus the ability to trade or lend gold without leaving vaults, underpins London’s dominance in over-the-counter trading.
New York remains the leading centre for gold derivatives, with 6,300 tonnes at the Federal Reserve and futures trading on Comex. But London’s physical trading grip shows no sign of weakening. Even metal backing New York-listed ETFs is sometimes held in London, though moving reserves requires melting 12.5kg bars in Zurich.
Global competition is growing. Singapore is launching a clearing system and vying with Hong Kong, while the Intercontinental Exchange has introduced a new London gold futures contract. Digital gold tokens pose a longer-term uncertainty.
Source: Financial Times Markets · Summarized by HeadlinesBriefing