The gold industry is supporting the idea for alternative pricing methods to the questionable London gold fixing, which dates back nearly 100 years. Currently, four banks hold a conference twice daily to determine the going rate for the precious metal. There have been recent probes into how the fixing is conducted due to evidence of potential market manipulation. Barclays PLC, one of the London fixing member banks, was found guilty of gold manipulation and fined £26 million by the Financial Conduct Authority (FCA).
According to the World Gold Council (WGC), there was strong support to reform the current gold benchmark standard, which is used by central banks and miners for pricing. Natalie Dempster, managing director of the WGC central bank and public policy unit, said “we are at the start of a process that will lead to a reformed and modernized gold benchmark which attracts a broader range of market participants.”
The WGC believes that pricing should be determined by executed trades, as seen in other asset classes know as price discovery. Transparency should be at the forefront, as well.