London Gold Fix
The term "London Gold Fix" refers to a historical process by which the price of gold was set through a daily auction in London. It was used as a benchmark for determining the prevailing price of gold in the global market. The London Gold Fix has been a significant reference point for gold pricing and trading for many decades, although it has undergone changes and evolved over time.
Historical background
The London Gold Fix was established in 1919 when representatives from five prominent London gold dealers, known as "fixing members," would meet daily at the premises of N.M. Rothschild & Sons to set the daily gold price. These five firms were N.M. Rothschild, Mocatta & Goldsmid, Samuel Montagu & Co., Pixley & Abell, and Sharps & Wilkins.
Fixing process
The fixing process typically occurred twice a day, once in the morning (the "AM Fix") and once in the afternoon (the "PM Fix"). During these sessions, the representatives would discuss and agree on the gold price that would clear the outstanding buy and sell orders from their clients.
Transparency and consensus
The fixing process was known for its transparency and consensus-based approach. The representatives would adjust the price incrementally until they reached a point where buy and sell orders balanced, at which point the "fixing price" would be set.
Benchmark role
The London Gold Fix served as a benchmark for gold pricing worldwide. Many financial transactions and contracts, such as those in the jewelry industry and international trade, used the London Gold Fix as a reference point for determining the value of gold.
Evolution and regulation
Over time, the London Gold Fix underwent changes to enhance transparency and compliance with evolving regulatory standards. In 2014, the traditional fixing process was replaced by an electronic auction system known as the "LBMA Gold Price."
LBMA Gold Price
It's important to note that the London Gold Fix and its successor, the LBMA Gold Price, are significant in the global gold market, and they influence gold pricing in various financial markets and industries. However, they represent just one of several benchmarks and reference points used for gold pricing today. Gold pricing can also be influenced by supply and demand dynamics, geopolitical events, currency movements, and other factors.
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