(MENAFN- ProactiveInvestors) Two new players were admitted to the group that sets the gold price on Friday as a century of tradition was swept away.
US investment banking giant Goldman Sachs and Swiss bank UBS joined traders from () () and Societe Generale in setting the price online for the first time.
Gold was the last of the precious metals to have its price fix system changed after silver platinum and palladium all recently moved into the .
The London Bullion Market Association (LBMA) Gold Price replaced the London Gold fixing price and ICE Benchmark Administration (IBA) is the new administrator.
With all four precious metals on electronic auction platforms it will allow more firms to participate setting the market price and make the global market more transparent said the ICE Benchmark Administration.
Roughly US$18 trn of gold circulated globally in 2013 according to CPM Group a New York-based research company and according to the LBMA London is the largest centre for gold trading in the world.
Half of the world’s gold demand however comes from China and India and with announcements that a Shanghai Gold Exchange benchmark fix is set to be launched there may be a shift from the UK to China.
Julian Jessop chief global economist at Capital Economics said the gold price would not be affected by the move away from tradition.
He said: “The price of gold is not going to depend on how the fix is decided. More important is the level of the dollar the US monetary policy and the changes in the Eurozone.”
The price setting tradition dates back to 1919 when early dealers met in a wooden-panelled room in Rothschild’s office in London and raised union jacks to indicate interest.
This changed in 2004 and has since been fixed by conference call at 10.30am and 3pm.
But a year of investigations by German and English regulators into possible price rigging and Deutsche Bank’s decision to withdraw from the price fix group last year led to the overhaul.
The gold price was fixed for the first time electronically at US$1171.75 per ounce on Friday morning down from the day’s opening of US$1173.
The spot price started the week at US$1149 but had recovered to over US$1180 shortly after trading got underway in Wall Street on Friday.
A more dovish interpretation of comment from Federal Reserve chairman Janet Yellen and a pick-up in Chinese buying sparked the rise.
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