One metal. Different markets. | Canvas of Knowledge

London describes a delivery relationship

Loco London refers to bullion held in London and the associated market for settling metal there. It does not require every buyer and seller to be physically present in the city. The over-the-counter market allows counterparties to negotiate transactions bilaterally, tailoring features such as quantity, value date and delivery terms. This flexibility distinguishes a negotiated arrangement from a standard contract whose main specifications are established in advance for a broad market of participants. [1]

Futures standardise the promise

COMEX gold futures give participants exposure through exchange-listed contracts with defined specifications. Standardisation supports comparison, trading and the ability to offset positions. CME Clearing provides central counterparty clearing, which manages counterparty credit risk through its clearing framework. That does not remove losses caused by an adverse price movement. Trading a gold future is therefore different from buying an identified bar and leaving it in storage, even though both relationships are connected to the same metal. [2]

The categories can overlap

It would be too simple to equate all OTC transactions with an absence of central clearing. CME also describes clearing services for London gold forwards: transactions negotiated in the OTC market can be submitted for clearing and remain forwards rather than becoming futures. This example separates two questions that are often bundled together. How was the trade agreed? How is the resulting obligation cleared? The answers need not be the same label. [3]

Compare like with like

Before interpreting a difference between two gold quotations, check their contract, currency, delivery location and settlement date. A future dated months ahead is not an identical obligation to an immediate wholesale transaction, while a retail bar introduces another product and cost structure. Nor does an apparent gap establish a freely available profit: executing, funding and settling two linked transactions involves practical constraints. The goal here is market literacy—understanding what is being priced before interpreting the number. Settlement is part of that definition.

FOLLOW THE EVIDENCE

Sources & further reading

Sources checked 14 November 2026. The artwork is illustrative. Reference organisations do not endorse this website. Financial examples are educational, not investment recommendations.