Intercontinental Exchange launched a new physically settled gold futures market inside London's bullion hub on Oct. 6, adding a derivatives layer to the center that already underpins tokenized gold products like PAXG. A separate move by the Dutch central bank, which shifted 86 tonnes of reserves toward London between March and August, shows why the location of physical bullion still shapes how tradable it is.
Intercontinental Exchange, the owner of the New York Stock Exchange, opened a new gold futures market in London on Monday, alongside contracts for silver, platinum and palladium. The launch places another financial layer directly inside the world's largest physical bullion center, according to The Wall Street Journal. London handles more than $180 billion of over-the-counter gold transactions on an average day. Its vaults held about 9,632 metric tons worth roughly $1.4 trillion at the end of August, per London Bullion Market Association data.
Tokenized gold depends on the same vaults
PAX Gold offers the clearest link between the new contracts and the digital-asset market. Each PAXG token represents one fine troy ounce of London Good Delivery gold, with the backing bullion held in segregated LBMA-accredited vaults. Paxos says redemption into a physical bar currently requires at least 430 PAXG plus applicable fees, a gap between near-instant token transfers and institutional-sized physical settlement.
ICE's new XAU Gold Daily Futures represent 100 fine troy ounces and settle physically through unallocated Loco London vault accounts, using the same London Precious Metals Clearing Limited system. The futures contract therefore gives institutions another route to manage exposure around the bullion infrastructure that tokenized products already rely on.
A central bank's gold move shows why location matters
Between March and August, De Nederlandsche Bank transferred about 86 tonnes of gold from its holdings in the United States and Canada toward London, saying the shift would improve the tradability of its reserves amid heightened geopolitical uncertainty. About 59 tonnes were sold in New York and replaced with London gold, while 27 tonnes moved between North America, the Netherlands and London through swaps of compliant bullion.
As a result, London's share of Dutch gold reserves rose from 18.1% to 32.1%. DNB pointed to gold held at the Bank of England as highly tradable because it meets international market standards — a reminder that two identical quantities of bullion can carry different practical liquidity depending on where they sit.
London's dominance in physical bullion has not guaranteed success in exchange-traded derivatives before: the London Metal Exchange dropped its gold futures in 2022 after five years of weak activity, leaving New York as the dominant futures center. ICE already runs London's benchmark gold auction, giving its new contract a stronger starting position than that earlier attempt — a base the London Metal Exchange never had.
Source: Crypto News Flash
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