London Gold Fix

The London Gold Fix was the world’s primary benchmark for the price of gold from 1919 until 2015. Twice daily in London, five major bullion banks convened to set a single price at which the spot market would clear. Though the Fix itself was retired in 2015, its successor, the LBMA Gold Price, continues to anchor countless gold contracts and settlements globally.

Origins: wartime precision

The Fix was born in 1919, just after World War I, when the London bullion market was re-opening after closure. Before that, gold prices drifted through the day according to informal negotiation between dealers. Governments and large traders wanted a single, transparent reference point to settle bullion transactions without haggling.

The innovation was simple: set a price once in the morning and once in the afternoon at which the supply and demand for physical gold would match. Dealers would gather (or later phone) and state how many ounces they wished to buy or sell at the proposed price. If demand exceeded supply, the price rose; if the inverse, it fell. When the two balanced—a “fixing”—that price was locked in for the next few hours. All over-the-counter bullion trades for the day would reference that price.

This mechanism proved so useful that it became embedded in mining contracts, central bank reserves, and insurance valuations across the world. For nearly a century, the London Gold Fix was the standard.

The machinery of a fix

On any day before 2015, the five major bullion dealers (N.M. Rothschild & Sons, Mocatta & Goldsmid, Sharps Pixley, Johnson Matthey, and Samuel Montagu) would conduct the Fix around 10:30 and 15:00 London time.

The chairman (elected annually) would propose a price. The dealers would call their major clients—mines, jewellers, central banks, investment funds—and ask, at that price, how many ounces would they buy or sell. The chairman would tally orders. If demand and supply did not match, the chairman would adjust the price up or down and ask again. This iterative process continued until the books balanced. Once fixed, the price was announced to the market and used as the reference for all spot bullion deals until the next fixing.

This was not a hypothetical exercise. Real bullion flowed across London based on the Fix. The five dealers profited from the bid-ask spread (the difference between buying and selling prices), but the Fix itself was set as a single price—a snapshot of equilibrium.

The decline and scandal

By the early 2000s, the Fix was under strain. Electronic markets and 24-hour trading had made the twice-daily process seem anachronistic. Traders could see minute-by-minute gold prices on Bloomberg and futures exchanges. The Fix still mattered for contracts, but it was losing its grip on real-time price discovery.

Then, in 2012, allegations surfaced that the dealers conducting the Fix had colluded to move the price in their favour. Regulators in multiple countries launched investigations. Evidence emerged that some dealers had discussed the Fix price beforehand and coordinated their bids to suppress or inflate it for profit. The resulting manipulation harmed mines (paid less for ore), central banks (took losses), and legitimate bullion traders.

The scandal was a deep breach of trust. Institutions had relied on the Fix as neutral. When that neutrality evaporated, confidence shattered. In 2014, with investigations still ongoing, the five banks announced they would end the Fix and transition to a new benchmark.

The LBMA Gold Price

In 2015, the London Bullion Market Association (LBMA) launched the LBMA Gold Price as a replacement. Rather than five dealers meeting in a room, the new price is set through an electronic auction platform (operated by Refinitiv, a financial data firm). Participants (no longer limited to five) submit bids and offers electronically. The platform matches buy and sell orders and yields a clearing price. The process is transparent, auditable, and harder to manipulate because it is open-ended and anonymous.

The LBMA Gold Price is set twice daily at 10:30 and 15:00 London time, just as the Fix was. Existing contracts referencing “the Gold Fix” were legally updated to reference the LBMA Gold Price instead. The effect is continuity: traders, miners, and central banks continue to use a London-set twice-daily benchmark, but without the vulnerability to collusion that plagued the old mechanism.

The new system has held firm. The LBMA Gold Price is now the principal reference for spot gold globally, used in mining contracts, central bank accounting, and financial derivatives. It has become what the Fix aspired to be: a transparent, hard-to-game benchmark that market participants trust.

Why London, why twice daily?

London is the nexus of the global bullion market. It has the deepest network of refineries, dealers, and vaults. The major mining companies are listed in London and settle their hedges there. When the Fix (and now the LBMA Price) is set in London, traders across Asia, Europe, and the Americas can reference a common standard without waiting for US markets to open.

Two fixings a day—morning and afternoon—allow traders to rebalance positions. It is slow enough to reflect genuine market conditions (not a microsecond flutter) and frequent enough to remain relevant.

Modern uses

The LBMA Gold Price (successor to the Fix) is used in several ways:

• Mining hedges: Companies lock in selling prices for next year’s output pegged to the LBMA Price.
• Central bank valuations: Gold reserves are priced daily using the fixing for balance-sheet and disclosure purposes.
• Futures settlement: Some futures contracts reference the LBMA Price at expiry.
• Allocated vs unallocated contracts: Custodians often peg withdrawal or settlement prices to the LBMA Price.
• Jewellery and fabrication: Retail and industrial users buy metal at a markup or discount to the fixing.

Because it is so widely used, moving the LBMA Price even slightly affects billions of dollars in positions globally.

See also