Most confusing gold price behaviour is not economic. It is structural — an artefact of three markets with different conventions being described as if they were one. This edition is a plain-language tour of the plumbing, because the alternative is mistaking a settlement quirk for a monetary event.
London: where the metal actually is
The London over-the-counter market is the centre of gravity for physical bullion. It trades unallocated positions between members, settles by book entry against metal held in a small number of vaults, and prices in a twice-daily auction that produces the benchmark most contracts reference.
Two features matter for anyone reading the market from outside. First, most London activity is not delivery: it is transfers of claims, which is efficient and also means volume figures do not describe metal moving. Second, the eligible bar standard is the large good-delivery bar, which is why London liquidity and retail coin availability can diverge sharply during a demand spike — the two are not the same product.
COMEX: where the headlines are set
Futures on COMEX dominate price discovery for short horizons because that is where leverage and speed live. This is also the source of the standing accusation that paper gold suppresses the physical price. The honest version of the argument is narrower and more useful: futures allow exposure without metal, so the marginal price-setter in a quiet week is a position rather than an ounce.
What to watch instead of the conspiracy framing: registered against eligible inventories, and how open interest behaves during a price move. Rising open interest into a rally means new positions are financing it; falling open interest into a rally means positions are being closed, which is a different market with the same chart.
Shanghai and Mumbai: the physical read
Chinese and Indian premiums or discounts to the London benchmark are the cleanest available signal of whether physical demand is absorbing a Western-led move or resisting it. A sustained Shanghai premium during a rally says domestic buyers are chasing metal. A discount during the same rally says the move is financial and the physical market is stepping back.
The same logic applies to Mumbai, with the additional complication of import duty changes and a strongly seasonal wedding and festival pattern. A discount in the weeks after a duty change is a policy artefact, not a demand collapse.
The three dislocations worth noticing
First, a persistent gap between futures and spot beyond financing cost, which historically signals stress in the ability to move or borrow physical metal rather than a view on price. Second, lease rates spiking, which says borrowed metal has become scarce. Third, retail premiums on small formats blowing out while large-bar premiums stay flat, which is a fabrication and logistics bottleneck rather than a bullion shortage — and the fastest way to overpay if you mistake one for the other.
The practical takeaway
You do not need to trade any of these venues to benefit from watching them. The plumbing tells you who is moving the price on any given week, and that is usually more actionable than the price itself. When the venues agree, the move is broad. When they disagree, one of them is telling you something the headline has not caught up with.
On the programme
Market structure has a dedicated block on 10 October, built on venue data rather than commentary, including the settlement mechanics that surface only under stress. This edition is educational only and not investment advice.