London Fixing

In London, the price of gold is 'fixed' twice daily at 10.30 am and 3.00 pm at the premises of N.M. Rothschild & Sons, whose representative acts as chairman.

There are four seats currently held by:

Deutsche Bank AG

Deutsche Bank gained its fixing seat in 1993 by acquiring Sharps Pixley, one of the original London brokers. The Sharps name was discontinued in 1996.

HSBC Bank USA, London Branch

HSBC traces its fixing membership back to Samuel Montagu's traditional seat. Their gold business is now allied to the former Republic Bank of New York as HSBC Bank USA, active also in New York and Hong Kong.

N. M. Rothschild & Sons

Rothschilds have been in the London gold market for 200 years. They have chaired the fixing, which is held in their offices, since 1919 and are the sole independent survivor of the original fixing members.

The Bank of Nova Scotia-ScotiaMocatta

Scotia-Mocatta is the global bullion banking division of the Bank of Nova Scotia, formed in 1997 by the bank's acquisition of Mocatta Bullion from Standard Chartered Bank in London. Mocatta itself dates back to 1671 as the oldest member of the London market.

The first fixing took place on 12 September 1919, when the price was agreed at £4.18s.9d ($20.67). The original instruction laid down that "The principle to be maintained with regard to the sale of gold in the free market in London is that everyone attending the gold fixing is entitled to buy or sell gold on equal terms with everyone else present… It is also agreed that only one price shall be quoted and shall represent the price at which all supplies can be absorbed".

Gold fixing at NM Rothschild and Sons began in September 1919
(Credit: courtesy NM Rothschild)

This principle remains the strength of the fixing because large volumes can be bought and sold at one price. The advantage of a clearly posted price has encouraged mines, central banks, fabricators and investors to do their business on the fix, because it is undisputed, especially if the price is volatile.

At the fix, a trader from each of the five members sits at a desk in a special room at Rothschilds', each with an open telephone line to their own trading room. There is a small Union Jack Flag on each desk, which can be raised with a cry of 'flag up' to halt the session while the representative confers with his trading room.

An opening price is suggested by the chairman and, after conferring briefly, each trader indicates if they are a seller, buyer or have no interest. If no seller appears at the opening bid, the price is moved up by 15 cents or more; if no buyer, it is moved down.

Once sellers and buyers appear, the chairman asks 'figures please' and each trader states how many 400 troy ounce, good delivery bars are offered or required (thus 'ten bars' indicates 4,000 ounces). When selling matches buying, the price is 'fixed'.

The price was quoted in sterling from 1919 until 1968, when it was changed to US dollars; the afternoon fix was also then introduced to accommodate New York. The fix normally takes five to ten minutes; the longest in living memory, two hours 26 minutes, took place on 23 May 1990, when a Middle Eastern bank came into the fix offering about 15 tonnes (482,000 ounces).

Commission is by agreement. Payment is two working days after the contract date. Turnover is not revealed, but can vary from zero to more than 20 tonnes (643,000 ounces). However, the average daily clearing turnover of the whole London market – as opposed to the fixing – has been published monthly since 1996.