COMEX Shifts Gold Strategy Amid Delivery Risks and Global Trends

The gold market has undergone seismic changes since November 2024. A staggering 400 metric tons of gold have moved from London to New York while COMEX, and now has stopped offering gold contracts tied to London. COMEX is likely responding to the pressures of physical gold delivery. Here’s what’s driving these shifts and why they matter.

Why Is Gold Heading to New York?

Two main factors explain the massive gold migration to COMEX warehouses in New York:

1. Basel III Regulations Basel III, an international banking framework, elevated physical gold to “zero-risk” asset status starting in 2024. This means banks can rely on gold to meet stringent financial safety standards, pushing demand for actual gold over paper-based trading.

2. Economic Uncertainty Donald Trump’s election in November 2024 rattled markets with talks of tariffs and policy shifts. Historically, uncertainty nudges investors toward gold as a stable safe haven. But this time, the demand is for physical gold bars—not contracts or promises on paper.

The result?

Gold reserves in New York had to be bolstered. COMEX acted swiftly, transferring 400 metric tons from London to meet both regulatory changes and soaring demand.

Why did COMEX Drop London Gold Contracts this past Friday?

COMEX stopped offering contracts tied to London gold, including Cleared OTC London Gold Forwards and London Spot Gold Futures. The likely reasons:

Delivery Risks: Fulfilling London-based contracts means delivering physical gold sourced from London. But with massive shipments already leaving for New York, supply from London is tightening. COMEX minimizes the chance of unfulfilled delivery obligations by cutting these offerings.

Simplification: Contracts like the London Spot Gold Futures didn’t even involve physical gold delivery, as they were settled in cash. Their removal may simply reflect low trading interest or COMEX’s intent to streamline operations around U.S.-centric gold trading. By axing these contracts, COMEX avoids making promises that grow harder to keep and better aligns with its current resources.

Challenges Behind Moving 400 Metric Tons of Gold: Shifting huge amounts of gold halfway across the globe is no small feat. The costs alone are staggering, covering shipping, insurance, and security. Then there are the logistical snarls.

Bar Standards: London’s 400-ounce gold bars don’t fit neatly into COMEX’s 100-ounce bar system. Transforming these bars into the right size adds time and expense. Geopolitical and Regulatory Complexities Supply chain disruptions or political tensions could slow or complicate gold transfers. Plus, differing rules on purity and sourcing make integrating London gold into the U.S. framework trickier. By increasing its supply in New York, COMEX sidesteps these challenges and pure logistical headaches.

COMEX’s Strategy: Minimize Risk, Maximize Control The relocation of gold to New York and the removal of London contracts reflect strategic risk management. COMEX is ensuring it meets pressing physical gold demands while also preparing for any wildcards in the future.

Delisting London contracts reduces strain, focusing attention on gold they can access quickly and reliably in the U.S. The Bigger Picture The movement of 400 metric tons of gold and the elimination of London-linked contracts are about more than logistics.

They’re part of a broader effort to adapt to evolving regulations, economic shifts, and market trends. With Basel III rules kicking in and investors doubling down on physical assets during uncertain times, gold trading has entered a more tangible, grounded era.

COMEX’s response underscores one of the clearest lessons in finance and life alike: when the landscape changes, adaptation isn’t optional; it’s essential. In this case, failing on delivery could result in an exchanges extinction.