Most retail traders interact with a single quoted gold price and never think about how that price actually gets cleared and settled behind the scenes. London's OTC market and the Comex futures exchange in New York handle this in structurally different ways, and the difference explains some price dynamics that are otherwise confusing.
1. London's OTC structure
The London bullion market operates over-the-counter, banks trade unallocated gold directly with each other, with a small number of clearing members settling the resulting obligations between them. There's no centralized exchange order book, trades are negotiated bilaterally and reported into the clearing system afterward.
2. Comex's exchange-cleared model
Comex, part of the CME Group, runs a centralized futures exchange where contracts are standardized and can, if held to expiry, result in a demand for physical delivery from an accredited vault. This creates a direct, trackable link between paper futures positions and physical metal in a way the OTC London market doesn't have.
3. Why delivery notices matter
When Comex sees an unusually high volume of delivery notices, longs choosing to take physical gold rather than cash-settle or roll their contract, it signals real demand for physical metal is showing up through the futures market itself, which can put pressure on registered vault inventory and occasionally shows up in wider physical premiums.