We quote “the gold price” as if there were one. There isn’t. Gold trades in three big centres, each with its own rules, bar sizes and buyers: London, New York and Shanghai. On a normal day their prices sit within a few dollars of each other, because traders ship metal or trade paper to close any gap. The days they drift apart are the days worth studying. The gap shows where metal is wanted, where it is missing, and whose money is driving the price.
Three markets, three kinds of gold
The vault
The physical centre of the world market. Over-the-counter trading in 400-ounce bars, with the twice-daily LBMA auction as the global reference price. Roughly 8,500 tonnes sit in London vaults, some 5,200 of them at the Bank of England.
The futures curve
Where gold is traded for future months: 100-ounce and kilo bar contracts, huge volumes, and very little actual delivery. Most price discovery in Western trading hours happens here.
The buyer
Priced in yuan per gram, behind capital controls. Gold enters China fairly freely but does not easily leave. That lets Shanghai trade at a premium, or a discount, for weeks at a time.
From these three prices come two gaps, and they are the ones to watch.
- The EFP (exchange for physical): New York futures against London spot. Normally a small, steady premium that covers financing costs. Over the two years before 2025 it averaged about $13 an ounce.
- The Shanghai premium: the Shanghai price converted into dollars, against London or New York. Normally well under 1% of the price, a few tens of dollars at today’s levels. A high premium means Chinese buyers are pulling metal in. A discount means they have stepped back.
2025: New York pulls the metal in
The first great divergence of this cycle was about American tariffs. From late 2024, traders feared the US might tax imported gold. New York futures rose above London to price that risk, and the EFP, normally around $13, went past $60 an ounce in January 2025. Banks did the obvious thing and shipped metal across the Atlantic to deliver into the higher price. COMEX registered stocks rose by about 300 tonnes. London felt the drain: gold lease rates there jumped to around 5% in January, and there were queues to withdraw bars from the Bank of England.
When the US exempted bullion in April, the EFP fell back to about $20 and the metal later flowed back out. It happened again in August 2025, when a US customs ruling suggested 1-kilo and 100-ounce bars could be tariffed. The December COMEX contract jumped to a record while London spot barely moved, and the EFP briefly passed $100. Within days the White House said gold would not be tariffed, and the gap closed.
January 2026: Shanghai sets the price
The second divergence came from the East, and it was far bigger in its effect on prices. It is also the part of this cycle most often told wrong, so the details matter.
China’s new controls on refined silver exports take effect, limiting them to 44 approved companies. Silver that used to leave China now has to stay.
Chinese money pours into gold and silver. Shanghai’s gold price has its strongest start to a year ever, up 19% in yuan, against 14% for the London price in dollars. In the week of the peak, the Shanghai premium averages about 1.8%, roughly $95 an ounce, according to World Gold Council data.
Silver sets records in London and Shanghai, above $111 at the London fix, with Shanghai silver about $17 an ounce higher still. Its fastest monthly gain since December 1979.
Gold peaks at about $5,600 an ounce.
Kevin Warsh is nominated as Fed chair and markets read him as a hawk. The dollar jumps, gold falls about 6% and silver has its worst day on record, down about 26%, days after trading above $121. Chinese buyers who had driven the rally turn sellers.
The Shanghai premium falls back to around zero within weeks. Chinese buyers stop paying up, and the support from Chinese demand is gone.
After one last spike above 2%, the premium turns into a discount of about 1.3%, some $55 an ounce, as gold slides.
Gold trades between $4,100 and $4,300, some 20 to 25% below the peak.
Money, not metal
It is tempting to say China was taking delivery of everything it could until January, and that this physical buying drove the rally. For gold, the numbers say something different. The best measure of Chinese physical offtake, withdrawals from the Shanghai Gold Exchange, came to 126 tonnes in January: just one tonne more than a year earlier. What exploded was financial demand:
So for gold, January was driven by Chinese money: ETFs, futures and short-term speculative capital, much of it borrowed. The Shanghai premium measured that pressure. When it collapsed, the buyers were not running out of metal. They were running for the exit.
Silver was different, and here the physical story is real. The export controls kept Chinese silver at home while COMEX registered silver stocks fell from 201 million ounces in September 2025 to about 79 million by April 2026. Chinese silver imports hit a record 836 tonnes in March, and Shanghai silver still traded about 14% above London that month. Yet silver kept falling. Physical buying can put a floor under a price. It does not stop a leveraged crowd from leaving.
Where the three prices stand now
The picture in China has changed. SGE withdrawals fell to 62 tonnes in August, down 27% on a year earlier, as bar buyers waited on the sidelines and jewellery demand stayed weak at high prices. Chinese gold ETFs still added 11 tonnes. The biggest Chinese buyer now is the state: the People’s Bank of China added 20.2 tonnes in August, its largest monthly purchase since October 2023. At the same time, Chinese banks are winding down retail margin trading in gold and silver, taking more leverage out of the market (read our China note).
The premium itself has recovered to about 0.7% in late September, close to its long-run average, and it has historically firmed from Golden Week (1–7 October), the start of China’s peak buying season, into the year end.
In short: households are waiting, speculators are being pushed out, and the central bank is buying. That is a very different China from January’s, and a healthier one for gold’s floor, even if it adds less fuel to the price.
What to watch
- The Shanghai premium. Its sign matters more than its size. A premium rising well above 1% means Chinese buyers are chasing again. A discount means they are stepping back.
- SGE withdrawals, monthly. Published by the World Gold Council. Physical demand shows here, not in the headlines.
- The EFP. A New York premium far above its usual level means metal is being pulled into the US, usually for a policy reason.
- London lease rates. A jump means metal in London is short, as in January 2025.
- Which kind of Chinese demand. ETF and futures surges can reverse in a day. Central bank buying and physical withdrawals build more slowly and last longer.
The same approach works for other metals. Copper right now trades on two curves that point in opposite directions, London tight and New York full. We explain how to read futures curves in Why Oil Can Fall $7 Overnight Without Anything Happening.
Write it down
Before you add to a gold position, write down one line about each market: is New York paying a normal premium over London, is Shanghai paying a premium or a discount, and is Chinese demand coming from metal or from money? If all three look stretched at once, as they did in late January, you are buying from the most excited buyer in the world.
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Sources
- World Gold Council, “China gold market update: A strong start to 2026”, February 2026.
- World Gold Council, “China gold market update: Official buying accelerated in August”, September 2026.
- World Gold Council, “You asked, we answered: Is the threat of US tariffs moving the gold market?”, February 2025.
- TradingKey, “Behind the record gold exports, a signal most people missed”.
- Saxo, “Tariff shock sends gold futures soaring – yet spot market holds the real signal”, 8 August 2025.
- BullionVault, “Record trading in silver sends price to new London and China highs”, 27 January 2026.
- Bullion Trading LLC, “Gold & silver price crash Jan 2026: what triggered it”.
- NAI 500, “Gold and silver crash: was it Beijing or Washington?”, February 2026.
- World Gold Council, “Weekly Markets Monitor: Golden Week in China”, 28 September 2026 (Chinese gold price premium, weekly averages of Au9999 vs LBMA Gold Price PM).
- Business Standard, “Gold’s 25% fall after record highs”, March 2026.
- Phoenix Refining, “China’s 78% silver import surge”, 2026.
Premium and spread levels are approximate and as reported at the time; different sources measure them against slightly different reference prices. Educational content to support your own research and decisions. Not financial advice.