It is designed to fix a price for settling contracts between members of the London bullion market, but the gold fixing informally provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets.
The LBMA gold price is set twice every business day at 10:30AM and 3:00PM, London time, in United States dollars (USD).
The first few fixings were conducted by telephone until the members started meeting at the Rothschild offices in New Court, St Swithin's Lane.
In 1933, Executive Order 6102 was signed by U.S. President Franklin D. Roosevelt, requiring US citizens to turn in their gold for $20.67 per ounce.
However, when indexed for inflation, the 1980 high corresponds to a price of $2,305.18 in 2011 dollars,[3] thus the 1980 record still holds in real terms.
Barclays Capital took its place on 7 June 2004 and the chairmanship of the meeting, formerly held permanently by Rothschilds, now rotates annually.
On 28 June 2012, an employee of Barclays manipulated the gold fixing process to prevent a derivative product previously sold to a client from leading to a payout.
That will decrease the number of proposed purchases, both because more buy limit orders will fail and because of proprietary traders.
At the same time, it increases the number of proposed sales, both because more sell limit orders succeed and because of proprietary trading.
Buyers are charged 20 cents per troy ounce as a premium to fund the fix process; this results in an implicit bid–ask spread.