A key part of the gold market will see a major shift Friday
New gold price medium may lift China’s ‘secretive veil’
SAN FRANCISCO (MarketWatch) — On Friday, for the first time in close to a century, the gold market price fix is about to change. It is a move that could potentially provide a better view of China’s insatiable demand for the precious metal.
The London Bullion Market Association said the LBMA Gold Price will launch on Friday, with the ICE Benchmark Administration operating the auction process. That will replace the so-called London Gold Fix, a widely-used pricing medium that has been around since 1919 and is administered by London Gold Market Fixing Ltd. twice daily.
“The changes taking place with the new gold fix could be a game changer for gold trading as we know it,” said Kevin Kerr, president of Kerr Trading International.
Here’s why:
The London Gold Fix, which will be discontinued after Thursday, is determined by just four participants. The nearly 100-year-old, medium has also been the target of decades of manipulation allegations.
But the LBMA has said the electronic auction process for setting the gold price is designed to be transparent and to allow as many participants as possible.
“The new method for fixing the gold price daily will be more reflective of that day’s collective price of gold on the world market,” said Jim Wyckoff, senior analyst at Kitco.com, adding that he believes the previous London fix “was not greatly askew on that determination.”
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