What is the Gold
Fix?
To help facilitate trades on the London gold market, the price of gold is
"fixed" twice each weekday. The Gold Fix is determined by a five
member panel, known as The London Gold Market Fixing Ltd.
The Gold Fix is used to
help members of the London Bullion Market Association (LBMA) complete trades.
The gold fix sets values in US dollars, British Pounds and Euros, and is used
as a benchmark price by most of the world's markets for bullion and other
gold derivatives.
The London Gold Market
Fixing panel is manned by banks who participate in gold trades and who are
registered members of the LBMA.
During the conference call a starting price per ounce is determined close to
the current spot price. Each participant then calculates the effect of their
order books and their own trading interests on that price, and a new price is
proposed.
The idea of the gold fix
is to determine the price at which orders to buy and sell held by each of the
panellists balance. The proposed price is raised
and lowered until that balancing point is identified. Gold buying customers
are levied 20 cents per Troy ounce traded to help fund the fixing process.
The gold fix process has
been in operation since 1919, working in exactly the same manner to this day.
The only difference is that fixing meetings now take place via telephone
conference calls, rather than face-to-face.
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