THE new chair of the London Bullion Market Association has urged the revival of gold futures trading in the UK despite earlier failed attempts to establish derivatives contracts in the world’s largest physical gold trading centre.
Peter Zoellner, whose organisation represents bullion trading banks, told the Financial Times on Wednesday that previous efforts to launch gold futures in London had been premature but added the global market would benefit from having “two or three places with decent liquidity”.
“I think it makes sense that the gold market can trade on different venues,” Zoellner told the newspaper. “Sometimes people start something a bit too early. Maybe we are in a different situation.”
His comments come as uncertainty surrounding President Trump’s tariff policies has raised concerns about trading on US exchanges. London Metal Exchange volumes for base metals have risen this year whilst New York’s have declined, said the Financial Times.
London’s bullion trade predominantly occurs through bilateral over-the-counter physical transactions, with no futures market. CME Group’s Comex operates the most liquid gold futures contract in New York, followed by Shanghai Gold Exchange.
The London Metal Exchange launched a gold futures contract in 2017 but shuttered it five years later due to insufficient volumes. An earlier venture ran from 1982 to 1985 before closing.
The LBMA is also considering releasing more pricing data publicly, including forward contracts and real-time prices. Zoellner, formerly head of banking at the Bank for International Settlements, said developing a “strong benchmark for a forward price” would enhance market transparency.
Gold prices have climbed 57% this year to approximately $4,100 per ounce. Zoellner expects central bank purchases to continue supporting prices, citing concerns about government bond markets, mounting public debt and trade tensions as contributing factors.
