Banks Consider Overhaul of Century-Old London Gold Fix

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Ch-ch-ch-changes? “Banks are considering an overhaul of London’s century-old gold benchmark used by miners, jewelers and central banks to buy, sell and value the precious metal, according to a person with knowledge of the process,” reports Bloomberg.

“The five banks who oversee the so-called London gold fixing — Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA — have formed a steering committee that’s seeking external firms to advise how the process could be improved, according to the person, who asked not to be identified because the review isn’t public.”

“The fixing refers to a rate-setting ritual dating back to 1919 in which representatives of the five member banks speak by telephone from a couple of minutes to more than an hour about buying and selling gold. The method has faced scrutiny in recent months, with regulators in London, Bonn and Washington — who are already looking into manipulation of interest rates and currencies — investigating how prices are set in the market.”

“While there’s no evidence the gold fix is being manipulated, economists and academics have said the way the benchmark is set is outdated, vulnerable to abuse, and lacking in any direct regulatory oversight. Deutsche Bank, Germany’s largest lender, said in a statement last week it plans to withdraw from the panels for setting gold and silver fixings.”

In metal price news for precious metals…

The week’s biggest mover on the weekly Global Precious Metals MMI® was the price of US platinum bar, which saw a 2.4 percent increase. This week marked the third in a row of rising prices for the metal. The price of Chinese platinum bar finished the week 1.3 percent higher. The price of Japanese platinum bar rose 0.3 percent this week, closing out the third week.

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The price of Chinese palladium bar rose 1.8 percent over the past week. This was the third week in a row of increasing prices. Closing out the third week of rising prices, the price of Japanese palladium bar increased by 0.9 percent. Following a 2.2 percent increase in the week prior, the price of US palladium bar fell 0.1 percent last week.

The price of Indian gold bullion rose 0.7 percent after falling 0.2 percent during the previous week. The price of US gold bullion rose 0.5 percent this week, closing out the third week at $1,255 per ounce. Closing out the third week of rising prices, the price of Chinese gold bullion increased by 0.2 percent. Following a steady week, prices for Japanese gold bullion closed flat.

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The price of Japanese silver rose 1.3 percent after falling 0.1 percent during the previous week. The price of US silver finished the week 0.9 percent higher. The price of Indian silver rose 0.5 percent after falling 1.2 percent during the previous week. Chinese silver prices were off slightly, down from CNY 4,085 ($675.17) a week ago.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends. For more information on the Global Precious Metals MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.