Gold Investor

The 95 year old daily "gold fix" went through some major changes last year. The LBMA (London Bullion Market Association) members Barclays, ScotiaMocatta, HSBC and Société Générale were setting the price of gold at 10:30 am and 3:00 pm, London time. Now further changes are coming up in March as Chinese banks are looking to exert their influence as one of the several additional institutions, who have expressed interest in setting this important price. The daily gold fix is used by central banks, ETFs and mining companies. As per Bloomberg:

"No Chinese companies have ever directly participated in the 95-year old price-setting ritual that takes place twice daily by phone between four banks. ICE Benchmark Administration was chosen in November to run the replacement, after silver, platinum and palladium ditched daily fixings last year. Chinese gold demand has more than doubled since 2009. “We are encouraged by the number of firms who have shown interest in being participants in the new, electronic auction,” Finbarr Hutcheson, president of IBA, said in the statement. “Expanding the number of participants in the auction will increase the transparency and robustness of the data” and better represent the market price, he said."

This should not come as a surprise as a lot of physical gold has been moving east to China (and also Russia and India). The interests of these new holders of gold would need to be considered especially with Eastern exchanges, like the one is Shanghai, proving to be a force when it comes to trading of gold and other commodities. The price of gold, as fixed in London, would have to be a better reflection of the global supply and demand.