Energy & metals
What is the London Bullion Market Association (LBMA) and how does it link to CME gold pricing?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
The LBMA sets the physical gold spot benchmark (LBMA Gold Price) in London, which CME COMEX gold futures (GC) reference and arbitrage against via basis trades between cash and futures.
How it works
LBMA members conduct twice-daily electronic price auctions used as a global pricing benchmark; CME futures prices track this spot price closely through arbitrage and delivery mechanisms.
An example
Bullion banks arbitrage differences between the LBMA spot price and CME GC futures by simultaneously trading London vaulted gold against COMEX contracts.
Risk & limitations
Transport, storage, and purity differences between London and COMEX-approved bars can create temporary basis dislocations, as seen during 2020 COVID disruptions.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.