The leading physical gold market is London, where trade is conducted by members of the London Bullion Market Association (LBMA), which brings together specialized operators in the sector. In London, the official gold price is set twice a day and is used as a reference for most gold-related contracts worldwide.
As for the financial gold market, most trading takes place on COMEX, part of the New York Mercantile Exchange (NYMEX), where the most liquid gold futures contracts are traded.
Bars classified as London Good Delivery (LGD) meet specific characteristics established by the LBMA. Good Delivery bars weigh 400 troy ounces (approximately 12.4 kg), are produced by an LBMA-accredited precious metals refinery and are assayed and guaranteed to have a minimum purity of 99.5%. This standard has spread quickly among traditional market participants and has become a fundamental requirement for trading gold bars, contributing to the growth of the London gold market.
By guaranteeing specific and identifiable quality requirements, the Good Delivery standard allows professional buyers to accept new gold bars without assaying them to verify the actual amount of precious metal contained in them. Consequently, the LGD standard makes it easier and faster to use gold for financial transactions.
Although this standard was introduced in 1987, subsequent to the period during which the gold was acquired by Banca d'Italia, thanks to recent upgrades, a significant portion of the Bank's gold now meets LGD specifications.
It should be noted, however, that gold not meeting LGD requirements can still be traded, subject to a discount-typically equivalent to the cost of upgrading-relative to the official market price.
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