Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Kuwait- Bid to modernise process  Join our daily free Newsletter

MENAFN - Arab Times - 08/07/2014
No. of Ratings : 0
Add to Mixx!

(MENAFN - Arab Times) Normal 0 false false false EN-US X-NONE AR-SA /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri""sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} LONDON July 6 (AFP): London's century-old gold price fixing tainted by a rigging scandal and attacked by critics as old-fashioned goes under the spotlight this week in key talks aimed at modernising the process. Analysts said that the market price of gold which is driven by investment and jewellery demand could climb as a result of an overhaul.

Buyers and sellers of the precious metal will meet in London on Monday to discuss the setting of the global benchmark which affects the flow of billions of dollars worldwide every day.

The World Gold Council (WGC) will host an eagerly-awaited forum with retail and central banks exchanges mining firms refiners traders and other industry groups while Britain's Financial Conduct Authority (FCA) watchdog will attend as an observer.

The benchmark gold price is set by four banks at 10:30 am London time (0930 GMT) and 3:00 pm via teleconference.

The banks -- Britain's Barclays and HSBC Canada's Scotiabank and Societe Generale of France -- are all members of the Gold Fixing Company and agree the price twice daily. Germany's Deutsche Bank pulled out of the panel earlier this year.



The process begins with the so-called spot price of gold which is based on the current market rate of contracts for physical delivery of the metal.

The four banks must then declare whether they are interested in buying or selling at this level. The price can fluctuate depending on the balance of supply and demand and settles on a so-called "fixing".

The system lurched into crisis this year when Barclays was fined more than 26 million (45 million 33 million euros) by the FCA after a ex-trader at the troubled bank admitted attempting to manipulate the gold price.

Barclays is among several banks that were fined billions of dollars by regulators foreign exchange rigging prompting a broad review of how global financial benchmarks are set.

Critics argue the gold-price fixing process is also open to abuse.

"It lacks transparency which means prices can be rigged to benefit banks at the expense of producers traders investors jewellers and other market participants" said Mark O'Byrne research director at broker GoldCore.

"Prices should be determined by market forces of supply and demand and not due to a bank's determination."

The process is little changed since its creation on September 12 1919 when the Gold Fixing Company's five founders -- including NM Rothschild & Sons -- agreed one single daily price fix in British pounds.

O'Byrne added: "The gold fix is anachronistic in the modern technological age of electronic trading and a move to electronic trading seems inevitable. At the same time this will not be a panacea as oversight and transparency remains important."

Caroline Bain senior commodities economist at research consultancy Capital Economics said transparency was needed to prevent price rigging.

"It can be manipulated even though it is based on real deals" Bain told AFP.



"Traders working for institutions involved in the 'fix' can make deals that would influence the price in a way that suits their portfolio.

"There is a lack of transparency about how the price is derived. It also contributes to a much wider lack of information on the size of the gold market."

For its part the WGC has already stated that the gold market needs greater transparency and auditing of the data used to determine the London price fixings.

Between two and four million ounces of physical gold transactions are based on any given day's fix price according to estimates from commodities research specialist CPM Group.

Back in May Barclays was fined by the FCA for failing to adequately manage conflicts of interest between the bank and its customers.

The watchdog uncovered systems and controls failings in relation to a fixed London pricing of gold over a nine-year period to 2013.

Bain added: "The case was more about internal problems at Barclays as they were not monitoring the trader's activity but it did highlight the fact that the gold fix can be manipulated."

The gold market remains subject to volatility as the metal is often seen as a haven investment in times of geopolitical uncertainty.

In recent weeks mounting violence in Iraq has sent traders fleeing to gold.

Gold jumped last Tuesday to a 3.5-month spot price high of 1334.06 per ounce on the London Bullion Market.

Prices had rocketed to an all-time peak of 1921.15 per ounce in September 2011 on fears of a fresh global recession amid the raging eurozone debt crisis.

The market could return once more to such levels if the fixing system is overhauled according to O'Byrne.

"We believe that a more transparent and reliable fixing could lead to higher gold prices as we suspect that prices are artificially low at this time and do not reflect the delicate supply demand balance in the physical gold market" he told AFP.

"Nor do they capture the degree of systemic and geopolitical risk in the world today."







Arab Times

  MENA News Headlines
 Oct 22 2016 - EU regrets withdrawal of South Africa from ICCKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) BRUSSELS, Oct 22 (KUNA) -- The European Union has expressed its "deep regrets "over South Africa's decision to initiate its withdrawal from the International ...

 Oct 22 2016 - Kuwait- KUNA main news for Saturday, Oct 22, 2016Kuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) Local: KUWAIT -- With attendance of the visiting Queen Silvia of Sweden, Information Minister and Minister of State for Youth Affairs Sheikh Salman ...

 Oct 22 2016 - Swiss NGO honors Kuwaiti-based institute for global effortsKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) By Nawab Khan BRUSSELS, Oct 22 (KUNA) -- The Arab Planning Institute (API), based in Kuwait, has been awarded the prestigious Gold Medal by the Crans Montana ...

 Oct 22 2016 - Kuwait- Info. Min. decides: Ban on primaries, reputation smearing, financial incentivesKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, Oct 20 (KUNA) -- The Minister of Information has issued a Ministerial Resolution stipulating total ban on primaries, tit-for-tat mudslinging among ...

 Oct 22 2016 - Boursa Kuwait ended last week with mixed performanceKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, Oct 22 (KUNA) -- Boursa Kuwait ended last week with mixed performance, as the Price Index closed at 5,321.46 points, down by 0.12 percent from the week ...

 Oct 22 2016 - US Secretary of Defense to meet with Iraqi Prime MinisterKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) BAGHDAD, Oct 22 (KUNA) -- US Secretary of Defense Ashton Carter arrived in Baghdad on Saturday to meet with Iraqi Prime Minister Dr. Haidar Al-Abadi along with a ...

 Oct 22 2016 - Kuwait- Info. Min. launches campaign for covering legislative electionsKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) KUWAIT, Oct 22 (KUNA) -- Minister of Information and Minister of State for Youth Affairs Sheikh Salman Sabah Salem Al-Sabah announced on Saturday the launching of ...

 Oct 22 2016 - Nizzolo wins Stage 1 of Abu Dhabi TourKhaleej Times
(MENAFN - Khaleej Times) Reigning Italian champion Giacomo Nizzolo (Trek - Segafredo) won Stage 1 of the second Abu Dhabi Tour as he outsprinted John Degenkolb (Team Giant - Alpecin) and race ...

 Oct 22 2016 - UAE- Two jailed for sharing indecent video of disabled manKhaleej Times
(MENAFN - Khaleej Times) Two Arab nationals were sentenced to three months in jail by the Sharjah court for capturing photographs and videos of a mentally-retarded man in an indecent manner and ...

 Oct 22 2016 - Kuwait FM delivers lecture at Atlantic CouncilKuwait News Agency (KUNA)
(MENAFN - Kuwait News Agency (KUNA)) WASHINGTON, Oct 21 (KUNA) -- Kuwait's First Deputy Prime Minister and Foreign Minister Sheikh Sabah Khaled Al-Hamad Al-Sabah delivered a lecture at the Atlantic ...





Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country

Search News
Market Indices
Quotes & Charts

Global Indices
Arab Indices


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Economic Calendar
Financial Glossary

Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help