LONDON’S century-old gold price fixing, tainted by a rigging scandal and attacked by critics as old-fashioned, goes under the spotlight this week in key talks aimed at modernising the process.
Analysts said that the market price of gold, which is driven by investment and jewellery demand, could climb as a result of an overhaul.
The process begins with the so-called spot price of gold, which is based on the current market rate of contracts for physical delivery of the metal.
The four banks must then declare whether they are interested in buying or selling at this level. The price can fluctuate depending on the balance of supply and demand, and settles on a so-called “fixing”.
The market could return once more to such levels if the fixing system is overhauled, according to O’Byrne.
“We believe that a more transparent and reliable fixing could lead to higher gold prices as we suspect that prices are artificially low at this time and do not reflect the delicate supply demand balance in the physical gold market,” he told AFP. “Nor do they capture the degree of systemic and geopolitical risk in the world today.”
Source The Daily Telegraph
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