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What Is The Gold Fixing Price?

By    |   Saturday, 11 July 2015 11:54 PM

The gold fixing price is the price of one ounce of gold, in U.S. dollars, set, or fixed, by a group of leading banks that meet twice each weekday, on London time, to buy and sell gold on behalf of their clients.

When the banks — representing equity funds, central banks and other entities looking to buy and sell gold in large quantities — converge on a bid that is acceptable to all the participants, that dollar figure becomes the price of gold for that particular batch of transactions. The process is explained on the Intercontinental Exchange (ICE) website.

The price also serves as a benchmark for other buyers and sellers of gold, and is a guiding force behind tens of billions of dollars in daily gold trades.

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Long known as the London Gold Fix, this influential pricing routine dates to 1919 and a version of it still takes place on London time, at 10:30 a.m. and 3 p.m. It operates differently today, however, in the wake of developments that have led to a transparency-minded, confidence-building makeover.

The revamped marketplace, called the London Bullion Market Association (LBMA) Gold Price, debuted on March 20, 2015 with two new member banks joining four Gold Fix legacy banks to conduct the bidding entirely online, through an electronic trading platform. The old method was by conference call. LBMA announced the new process in a statement posted on its website.

LBMA Gold Price replaced the London Fix in part because of concerns that the latter was subject to illegal price manipulation, The Wall Street Journal reported. Questions about its integrity only increased after an interest rate-rigging scandal emerged in 2012 at LIBOR, the London-based marketplace for lending between banks.

Today, both LIBOR and LBMA Gold Price are administered by ICE Benchmark Administration, an independent subsidiary of the Atlanta-based Intercontinental Exchange, which operates several marketplaces for equities and commodities, including the New York Stock Exchange.

The new system "should also help repair outside perceptions of London's role in the market," wrote Adrian Ash, research chief at BullionVault, a physical gold and silver market for private investors online, and an LBMA Gold Price customer.

"But it won't in fact change the underlying process of price discovery," Ash wrote. "Nor should it."

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The gold fixing price is the price of one ounce of gold, in U.S. dollars, set, or fixed, by a group of leading banks that meet twice each weekday, on London time, to buy and sell gold on behalf of their clients.
gold, fixing price
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2015-54-11
Saturday, 11 July 2015 11:54 PM
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