Gold Industry to Seek Independent Fix Price Administrator

The gold industry wants an independent party to administer the bullion price benchmark and “better transparency,” according to the World Gold Council.

The council yesterday hosted a meeting for the industry to discuss changes to the century-old price-setting mechanism, which is used by mining companies to central banks to trade and value the metal. Thirty-four delegates including producers, refiners, central banks and exchanges met in London to discuss the fixing, which is set daily by four banks.

“We need better data reporting, we need to be able to see what flows go through the fix and visibility of data,” Natalie Dempster, managing director of the group’s central banks and public policy unit, said today in an interview on Bloomberg TV’s Countdown. “We didn’t have today’s modern technology when this system was set up.”

While traders say fixings are efficient and a crucial reference point, economists and academics say the process is susceptible to manipulation and lacks sufficient regulation. Precious metals are getting more attention from regulators after price rigging in everything from interbank lending rates to currencies led to fines and overhauled financial benchmarks.

The fixing takes place at 10:30 a.m. and 3 p.m. in London by phone with Societe Generale SA, Bank of Nova Scotia, HSBC Holdings Plc and Barclays Plc representing themselves and clients. The U.K.’s Financial Conduct Authority, which was represented at yesterday’s meeting, fined Barclays Plc 26 million pounds ($44.6 million) in May after a trader sought to influence the gold fix in 2012.

“The visibility really has to be improved so that we can have independent and visible audits,” Dempster said.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza