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Report: U.S. Looking at Gold Price Manipulation

Regulators at the U.S. Commodity Futures Trading Commission are examining whether gold prices are being manipulated, according to a report in the March 13 Wall Street Journal. 

The newspaper said the agency is probing the transparency of the “setting of prices in London, in which a handful of banks meet twice daily and set the spot price for a troy ounce of physical gold.” However, the report added, no formal investigation has been opened.

According to international trade group the London Bullion Market Association, the London gold fix—considered the published benchmark for that metal—is set twice a day via conference call by five banks: Bank of Nova Scotia–ScotiaMocatta; Barclays Bank PLC; Deutsche Bank AG; HSBC Bank USA, NA; and Société Générale. The process dates back to 1919. A similar mechanism exists for silver.

The LBMA declined comment to JCK, except to reference this webpage about how the prices are derived. A spokesman told The Journal the prices are “very much done on a demand-supply basis until a price is arrived at. It’s fully transparent.”

In the U.K. press, the possibility of an investigation into gold and silver pricing is being compared to the country’s LIBOR scandal.

JCK News Director