LME bids for slice of $5T London gold market

Gold hovers near four-month low

london — More than two tonnes of gold were traded through the London Metal Exchange’s new LMEprecious spot contract on its first day as the exchange launched its bid to take a slice of the world’s biggest overthe-counter (OTC) gold market.

The LMEprecious suite of gold and silver contracts was developed with a group of backers including banks Goldman Sachs and Morgan Stanley, which then set up EOS Precious Metals to promote trade in the contracts and benefit from a 50:50 revenue-sharing deal with the LME.

The LME launched its contracts at 0000 GMT on Monday, though volumes did not pick up until the start of the European trading day at 0700 GMT.

By close of business on Monday, 75,500 ounces (2.3 tonnes) of gold had traded on the LMEprecious spot contract, exchange data showed. That is worth some $91.3 million at current spot prices.

“Typical interbank trade between one party and another would be 5,000-10,000 ounces in a single trade,” said Ross Norman, chief executive of bullion trader Sharps Pixley. “It will be nice to see what the trend is — if [it picks up], you’d begin to think, here we go.”

Market makers were quoting prices on spreads between contracts out to June 2022.

A source at one of the EOS partners said: “At this stage, players are finding their feet. It may be a while until people start trading in size.”

As well as Goldman and Morgan Stanley, the EOS partnership includes banks ICBC Standard Societe Generale and Natixis, proprietary trader OSTC and the World Gold Council. — Reuters LONDON — Gold prices hovered near four-month lows on Tuesday and the dollar held firm on expectations of tighter US monetary policy as the market awaited a speech from Federal Reserve chair Janet Yellen this week.

Spot gold was down 0.3 per cent at $1,210.16 an ounce at 1128GMT, near Monday’s $1,204.45, its lowest since March 15. US gold futures slipped 0.3 per cent to $1,209.7.

“The recent drop in gold reflects the market pricing in additional tightening from central banks,” Danske Bank analyst Jens Pederson said. “But we are at the lower end of the range for gold prices. It could be a buying opportunity if tensions with North Korea escalate.”

Gold is down more than six per cent from a seven-month high near $1,300 in June.