Gold fixing is a practice which determines the global price of gold. Although it is officially only used to set the price of gold for members of the London Bullion Market Association (LBMA), it is used to establish a base price which is used for gold all over the world. As a result, people who are active on the gold market usually eagerly await the outcome of the twice-daily gold fixing conferences.
This practice started in 1919, when there was a desire to get the gold market in London active as the city and the world recovered from the First World War. With the exception of a brief period of suspension during the Second World War, gold fixing has been occurring ever since, although the mechanics of the event have changed considerably from their early 20th century origins.
When members of the London Bullion Market Association first began meeting to determine gold prices, they met in person in the offices of one of the member institutions. Today, gold fixing is accomplished by teleconference. Five members of the LBMA are involved, operating as the London Gold Market Fixing Limited. During the conference call, the chair first throws out a price, usually close to the current spot price for gold, and members respond to push the price up or down depending on the orders they need to fill.
Gold fixing is designed to balance supply and demand while reaching a common price for orders. It is done at 10:30 AM and again at 3:00 PM. In addition to being involved in gold fixing, the LBMA is also involved in determining the price of silver, another precious metal which is widely bought and sold on the global market. The organization's tremendous influence on pricing has not gone unnoticed, with some people questioning whether or not gold fixing is entirely fair, or whether it should have the impact that it does.
People who are curious about the most recent price can find it at the LBMA's website. Results of gold fixing conferences are also often published on financial websites, especially if they focus on trading of gold and silver, and can be obtained by calling financial institutions.
Despite the huge influence it has on the market, the LBMA is not very accessible to members of the general public. Member institutions handle massive large-scale buy and sell orders for gold primarily on behalf of other financial institutions. Few individual investors trade in the scale handled by LBMA members.
