Who sets The Gold Price?

‘Spot Prices’ are the live current global market prices for metals being bought and sold ‘for immediate payment and delivery’. Because these prices are being influenced by live transactions they will fluctuate constantly.

The price data on our website is a Spot price which updates every 5 seconds to ensure that you have the most up to date figures when deciding on the best time to buy or to sell precious metals.

‘Gold Fix Price’ is the industry name for the LBMA Gold Price. Historically, the London Bullion Market Association set market rates for Gold at 10.30 am each day that the huge London market was open and again at 3pm to coincide with the opening of US markets. In 2015 ICE Benchmark Administration (IBA) took over the supervision of this price setting process for gold and also took over the process for silver in 2017.

IBA’s electronic platform has been well received by markets as it has settled concerns over market manipulation which was becoming an issue before IBA’s involvement.

The new process is essentially an online auction whereby the system puts forward an initial price in line with current market conditions. The participants, sixteen global financial companies and banks, then test the price to see if their sell and buy requirements can be satisfied at the offered rate. At the end of each round the system checks to see if the difference between buying and selling (the imbalance) is within the imbalance threshold (normally 10,000 oz for gold and 500,000 oz for silver).

If the ‘imbalance’ is outside of the threshold at the end of a round, then the system proposes a new price and a new round starts.

If the imbalance is within the limit of the threshold then the process is successful and the price is set.

‘Silver Fix Price’ is the LBMA Silver Price, again overseen by IBA and set at 12.00 (London BST) on each day that the market operates. All participants are currently also participants in the gold price process.

‘Platinum Fix Price’ is the Platinum Price which is independently administered by the London Metal Exchange (LME). Prices are fixed twice during each market day, at 09.45 and 14.00 (London BST). BASF Metals Ltd, Goldman Sachs International, HSBC Bank USA NA, Johnson Matthey plc and Standard Bank plc are the participants in the price setting process.

‘Palladium Fix Price’ is the Palladium Price which is independently administered by the London Metal Exchange (LME). Prices are fixed twice during each market day, at 09.45 and 14.00 (London BST).BASF Metals Ltd, Goldman Sachs International, HSBC Bank USA NA, Johnson Matthey plc and Standard Bank plc are the participants in the price setting process.

Because Dubai is such a huge regional centre for Gold, the Government are keen to preserve trust in the Gold market and have established a mechanism to set a maximum rate that jewellers and dealers are allowed to charge on the gold content of retail sales. The rate has a small margin built into it to offset bullion delivery and customs charges. The purchase price of gold jewellery in Dubai is therefore a combination of the current Dubai retail gold rate plus a making charge. The price of the gold is set but the making charge can be negotiated.

So, in answer to the question, “Who Sets The Gold Price?” the answer is “The Global Market, with the exception of Dubai where the rate is set by the Global Market and the Government.”

By iGold. Published on 27th November 2019.