Last month, the Dutch central bank announced it had transferred more than 78 tonnes of gold from New York to London, citing both crisis accessibility and the advantage of joining “the world’s most easily tradeable gold.” This move highlights London’s enduring prominence in the global gold market amid a backdrop of shifting geopolitical and economic dynamics.

The transfer is part of a broader trend among central banks to diversify their reserve assets away from US government bonds, as they increase gold holdings in response to uncertainty tied to US policy and geopolitical tensions. Over the past year, the amount of bullion held in London vaults has steadily climbed, reaching nearly 10,000 tonnes—valued at approximately $1.3 trillion—as central banks seek safer and more flexible custodianship.

London’s gold market competes with New York’s dominant position in gold futures trading, primarily conducted through the Comex exchange, and the substantial holdings of gold stored in the Federal Reserve Bank of New York. Nonetheless, London maintains a robust grip on the physical trading and storage of gold. The Bank of England’s reputation as a secure custodian, even after the UK sold half of its gold reserves 25 years ago, along with the City’s infrastructure for over-the-counter trading, lending, and collateral services, make it a preferred location for bullion storage and transactions.

Moving gold directly between London and New York entails logistical complexities, including the necessity of remelting and reshaping 12.5-kilogram “good delivery” bars to meet differing standards, usually requiring refineries in Switzerland. This makes London’s dominance in physical trading particularly resilient, according to industry experts.

While some nations and institutions are reconsidering the locations of their gold reserves—for instance, Venezuela is reportedly close to moving its $4 billion gold holdings from London to New York, and the German Bundesbank, which stores about a third of its gold in New York, has faced domestic calls to repatriate its bars—the overall pattern suggests a growing preference for holding bullion outside the United States. This trend intensified following the 2022 full-scale invasion of Ukraine and the freezing of Russia’s sovereign assets, which underscored concerns about political risk.

Globally, the renewed interest in gold trading reflects underlying factors such as rising bullion prices, geopolitical instability, and the broader institutional embrace of gold as a strategic asset. Other financial centers, especially in Asia, are also seeking to expand their roles. Singapore plans to launch a bank clearing system for gold this year and is competing alongside Hong Kong to attract more bullion trading, though officials deny intentions to replace London’s central market.

In addition to physical gold, the growth of digital gold assets like tokens introduces a layer of uncertainty and innovation. These digital instruments remain backed by physical bullion stored elsewhere—such as the cryptocurrency exchange Tether holding 22 tonnes of gold in Switzerland—but do not require the full suite of banking and clearing services that London provides.

The London Bullion Market Association (LBMA), which sets standards for refiners supplying gold to London vaults, is currently facing a legal challenge alleging responsibility for deaths of miners in Tanzania. The LBMA denies liability, and the case will determine the extent of its oversight obligations.

Despite these challenges, London continues to solidify its role as the preeminent center for physical gold trading, as evidenced by the increasing quantities of bullion housed within the City’s vaults.