London gold price fixing
London gold price fixing - Gold Price
It is a gold price which is fixed by the five members of The London Gold Market Fixing Ltd via conference call, which is used as a benchmark to pricing the major global gold products and derivatives.
How to fix the gold prices?
The Gold Fix establishes the price at which supply meets demand - across all the participating banks. And the participants must be members of the London Bullion Market Association; they are Scotia-Mocatta, Barclays Capital (Replaced N M Rothschild & Sons when they abdicated), Deutsche Bank, HSBC Bank and Société Générale. The price of gold is fixed twice each business day at 10:30 am and 3 pm, London time, and fixed in United States dollars (USD), Pound sterling (GBP) and European Euros (EUR)
The gold fix usually begins with the chairman declaring a gold price which is very near the ongoing spot market gold price. Then, the participants will decide to erect flag or not based on their customers' supply and demand. Until all of the members' flag is put down, the gold price is fixed. Otherwise, the chairman must change the proposed price.
Why to fix the gold prices?
There are lots of the banks' orders are limit orders. In other words, the seller or buyer is willing to sell or buy at any price below or above a certain limit. Consequently, if the chairman lowers price, more orders may come into the pool; conversely, more orders may drop out of.
It is really important that the gold fix price is not a fixed price. The gold fixing is the price at the exact instant in time at which it is agreed. Within seconds, the price of gold will fluctuate again. In other words, our transaction of gold is not at the London gold fixing, that is approaching to the gold fixing. As we deal our transactions, the London gold fixing often is used as a benchmark.