Everyone knows most futures trading is just for trading, recently Asia countries like China and India are demanding to deliver real gold, huge headache for some banks.
They are demanding for tons! Rumor is some banks offered 20% premiums in order to settle. So don't forget to close positions.
That's why they call them "futures" contracts. They are contracts for delivery of a commodity (in this case gold) at a future date. If the banks are long gold futures contracts and don't want delivery they need to sell the contracts before 1st notice day. If there were a problem with a seller not liquidating his contracts that would drive the futures price down to the point were the buyer is rewarded for taking delivery and selling the physical gold. If you don't know that this is how the futures markets work and understand how delivery affects the price, you shouldn't be in these markets.
It's been pointed out before that if some of that stuff was actually called, like even silver, there isn't enough mined up to deliver and some know that and probably are trying to corner the market to elevate prices and horde gold. It also is believed to cost too much to hold it even if you did have it.
We've been through "this" before. If "longs" don't liquidate soon enough before delivery, a "liquidation only" market can be declared to ease any potential "squeeze". The exchanges do that to protect themselves, not necessarily to screw-over the "longs". The exchanges will also "suggest" to market users that futures should be used for risk transfer and not for merchandising.
they have the right to demand settlement, till tuey change it to a cash settlement contract, its their right. if you cant handle it, then why did you sold those contracts in the first place, and why didnt you hedge. Your a bank, and after all of the derivitive scandals of the last year, you would have thought they would have learned.