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What is Gold Fixing?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 08 November 2016
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    Conjecture Corporation
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Gold fixing is a practice which determines the global price of gold. Although it is officially only used to set the price of gold for members of the London Bullion Market Association (LBMA), it is used to establish a base price which is used for gold all over the world. As a result, people who are active on the gold market usually eagerly await the outcome of the twice-daily gold fixing conferences.

This practice started in 1919, when there was a desire to get the gold market in London active as the city and the world recovered from the First World War. With the exception of a brief period of suspension during the Second World War, gold fixing has been occurring ever since, although the mechanics of the event have changed considerably from their early 20th century origins.

When members of the London Bullion Market Association first began meeting to determine gold prices, they met in person in the offices of one of the member institutions. Today, gold fixing is accomplished by teleconference. Five members of the LBMA are involved, operating as the London Gold Market Fixing Limited. During the conference call, the chair first throws out a price, usually close to the current spot price for gold, and members respond to push the price up or down depending on the orders they need to fill.

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Gold fixing is designed to balance supply and demand while reaching a common price for orders. It is done at 10:30 AM and again at 3:00 PM. In addition to being involved in gold fixing, the LBMA is also involved in determining the price of silver, another precious metal which is widely bought and sold on the global market. The organization's tremendous influence on pricing has not gone unnoticed, with some people questioning whether or not gold fixing is entirely fair, or whether it should have the impact that it does.

People who are curious about the most recent price can find it at the LBMA's website. Results of gold fixing conferences are also often published on financial websites, especially if they focus on trading of gold and silver, and can be obtained by calling financial institutions.

Despite the huge influence it has on the market, the LBMA is not very accessible to members of the general public. Member institutions handle massive large-scale buy and sell orders for gold primarily on behalf of other financial institutions. Few individual investors trade in the scale handled by LBMA members.

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anon337321
Post 5

Trading the spot gold price just before and close before New York opens, you can catch some pretty good moves.

anon336073
Post 4

Since they are members of LBMA, they must be looking at the demand and supply situations of England only (if I am not wrong). How does the price fixing account for other nations?

live2shop
Post 3

The five members of the committee in London that sets the gold prices twice a day must have a hard decision to make.

When there are various economic circumstances that hit a large country or a real downturn in the global economy, how do they judge the situation and set the price of gold for the day?

If their decision isn't the "right" one, they risk making the situation worse.

BoniJ
Post 2

I wonder if it's much fun to be one of the five members of the London Bouillon Market Association who have a teleconference twice a day, talk to the same people and make a decision about the price of gold for that day.

Gold fixing - the price that the precious metal, gold, will sell for, and the buying price is mostly determined by how many buy and how many sell orders are coming in.

Jewelers and dentists are looking for gold as long as the demand is there. Some people and institutions just want to invest in gold and are looking for a good buy.

Those five member of LBMA need to look at supply and demand, what's going on in the world, and economic situations, when they do their gold fixing.

seag47
Post 1

All of those traveling companies that want people to bring in their old gold for cash must be among those who anxiously await the results of the gold fixing conferences. I know that the amount of money they give out differs from day to day, because my friend and I both sold our identical class rings and got different amounts for them.

I went on Saturday, and she went the following Monday. She got $100 more than I did for mine. She also got more per ounce for her other gold than I did.

There’s no use in waiting until the last day of the trade show to take in your gold, because for all we know, the price could be greater at the beginning. We just have to trust these people.

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