March 24 (Reuters) - U.S. exchange operator CME Group Inc said on Tuesday it was launching a new gold futures contract with expanded delivery options that include gold bars, in a bid to address the disruptions to bullion's supply due to the coronavirus outbreak.
Earlier on Tuesday, Reuters reported the London Bullion Market Association and several major banks that trade gold had asked CME Group to allow gold bars in London to be used to settle its contracts to ease disruption to trading.
London is a key gold storage centre that uses 400-ounce bars which must be melted down and recast as 100-ounce bars to be accepted by Comex in New York.
The options for the new contract sizes include gold bars of 100 ounces, 400 ounces and 1 kg, CME said.
It will be available for trading on CME Globex, and will be subject to the rules and regulations of Comex in New York, the company added.
Traders feared shutdowns of air travel and precious metal refineries due to the pandemic will make it harder to ship bullion from London to the United States to meet contractual requirements.
"By offering a choice of delivery sizes as well as inter-commodity spreads with our benchmark gold futures, this new contract will provide customers with maximum flexibility in managing physical delivery," said Derek Sammann, CME's global head of commodity and options products.
Reporting by Bhargav Acharya in Bengaluru; Editing by Aditya Soni