LBMA in gold trading
The LBMA is the London Bullion Market Association, the trade body that sets the Good Delivery bar standard and oversees the London gold price auction.
Also called London Bullion Market Association, Loco London, Good Delivery
The LBMA (London Bullion Market Association) is the trade association for the London over-the-counter gold and silver market, the largest physical and spot gold market in the world. It maintains the Good Delivery List of refiners whose 400-ounce bars are accepted in London vaults, publishes the rules for loco London trading and clearing, and administers the LBMA Gold Price, the twice-daily auction that replaced the old London fix in 2015.
How it applies to gold trading
The spot price that XAUUSD follows is, at root, the price of loco London good-delivery gold for two-day settlement between LBMA members. The LBMA Gold Price auction at 10:30 a.m. and 3 p.m. London time produces the benchmark used to settle physical contracts, ETF valuations, central bank transactions and many derivatives. The afternoon auction in particular can cause a brief flurry on the XAUUSD chart as fixing orders are executed.
The LBMA also publishes monthly data on London vault holdings and daily trade volumes, which analysts use to gauge the depth of the physical market behind the screen price.
The LBMA also publishes the vault holdings of gold in London each month, which is the best available measure of the physical metal standing behind the loco London market.
A common mistake
Treating the LBMA auction price as the live price. It is a benchmark set twice a day; the market trades continuously around it, and the two can differ by several dollars at any moment.
See also: London fix, Spot gold, Bullion, COMEX.
Frequently asked questions
What is a Good Delivery bar?
A gold bar meeting the LBMA’s specifications: 350 to 430 fine troy ounces, minimum 995 fineness, produced by a refiner on the Good Delivery List, with the required marks and shape. These are the bars traded in the London wholesale market.
When is the LBMA Gold Price set?
Twice each London business day, at 10:30 a.m. and 3 p.m. London time, through an electronic auction. The p.m. price is the most widely used benchmark.