New Technology Replaces Traditional London Gold Fix

- April 08, 2015 -

Almost a century of tradition will disappear from the gold market as technology finally takes over. Thursday March 19th was the final day that traders at four Bullion Banks conversed by phone twice daily to determine the London Gold fix. The London Gold fix is used by miners, central banks, precious metals brokers and jewelers amongst others to deal and value gold bullion. Gold was the last precious metal to drop the traditional London fixings after silver, platinum and palladium converted to electronic auctions last year. Deutsche Bank AG triggered these reforms in 2014 when they abruptly withdrew from the precious metal benchmark process after allegations of price manipulation.

The London Bullion Market Association (LBMA) said last month that Chinese banks were among those in talks to participate in the new pricing. It would seem the reason for Chinese inclusion was to give the impression of a more diverse pool of banks in the decision-making process. However when all was said and done it’s now six familiar institutions calling the shots: Barclays, HSBC, Societe Generale, Bank of Nova Scotia, UBS and Goldman Sachs.

The ICE Benchmark Association (ICE), which now oversees the revised LBMA Gold pricing process, recently issued a statement praising the new procedures. According to the IBA “The fact that more firms are participating in the pricing will make the $18 trillion global market more transparent.” Considering the six bullion bankers involved, many have doubts as to the transparency of the entire process.

The pricing will still occur at 10:30 AM and 3:00 PM London time, with buy and sell orders submitted electronically in rounds till a final price is realized. The public is welcome to follow the auctions online via www.lbma.org.uk or by accessing the LBMA page at www.bloomberg.com.