Researchers from New York University have concluded the London gold fix may have been manipulated by bankers for over ten years. The gold fix is a benchmark used by Central Banks and industry to value gold. Authors of the report Albert Metz and Abrantes-Metz concluded the following.
“The structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality.” The authors also added, “It is likely that co-operation between participants may be occurring.”
This is the first piece of research which supports the notion that the five permanent members of the gold fix, Barclays Bank, Societe Generale, Bank of Nova Scotia, Deutsche Bank and HSBC could have been working together to manipulate the benchmark.
In January Deutsche Bank told markets its intention to sell its seat on the fix, following an investigation by German regulator Bafin into possible manipulation of the precious metals markets. Whilst in Britain the FCA is also reviewing how prices are set for a number of commodities including gold.