Market Update: Increased transparency on gold trading

On 20 November, LBMA published for the first time weekly trading volume data through LBMA-i – its new reporting service, which delivers greater transparency and insight into the over-the-counter (OTC) gold and silver markets. The report includes weekly trading volumes of the OTC Loco-London and Loco-Zurich markets. LBMA has announced that this service will provide daily volumes starting Q1 2019.

We believe that this new data, in conjunction with our revised estimates of global trade volumes, will help investors better understand the dynamics of the highly liquid gold market.

Overview of LBMA-i

LBMA-i was formed in direct response to the LBMA’s demand for a trade reporting service. The service, managed by Simplitium, collates reported trade data from LBMA members and anonymises and aggregates them for publication. Initially, all 13 market makers and 29 reporting member entities reported volumes; a further 15 are to begin reporting in early 2019. Reported figures include volumes from spot, forwards and options trades but do not include more complex derivative structures nor trades done through certain trading platforms.

Since its first report, LBMA-i data from 12 November to 14 December 2018 indicates average daily gold trading volumes of 29 million ounces, with a value of US$35.8 billion. For more details see Goldhub.

Chart 1: Gold trades more than many other financial markets

Average daily trading volumes1

Chart

1 Based on 1-year average trading volumes as of 14 December 2018, except for currencies that correspond to full-year 2016 volumes due to data availability.
2 Gold liquidity includes estimates on over-the-counter (OTC) transactions, and published statistics on futures exchanges, and gold-backed exchange-traded products. For methodology details visit Goldhub.
Source: BIS; Bloomberg; Germany Finance Agency; Japan Securities Dealers Association; LBMA; UK Debt Management Office (DMO); World Gold Council

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