Gold price fixing ‘was routine’

<p>Fixing gold prices was routine among traders, it has been claimed.</p>

Traders routinely fixed the price of gold, rather than it being an isolated case.

This is according to one hedge fund manager who was working in the gold sector at the time of the fixing of gold prices, which resulted in Barclays being given a £26 million fine.

Although an investigation by the Financial Conduct Authority (FCA) concluded by stating that was an isolated incident, this is not the case, says the hedge fund insider.

Speaking to the Financial Times, he said: "If I was at the FCA I would be looking at all banks trading digitals. This could be the tip of the iceberg – there's a massive issue with exotic derivatives and barriers."

Options

Digital options have become a popular trading method, with payouts to holders triggered in the event of a predetermined price being reached. But a former precious metals manager at a large investment bank stated that this could have led to influences on the price of gold.

He said: "These are not Ma and Pa products, they are for super-professionals. There's a fundamental belief that both parties can aggress or defend their book, and I would have expected my traders to do so."

The price of gold could therefore have been fixed by the traders, which may mean the FCA will have to reopen its case file on the setting of the value of the precious metal. In its report, the FCA stated that Barclays had poor controls over the value of gold, while the body also said the bank failed to "manage conflicts of interests between itself and its customers".

Tracey McDermott, the FCA's director of enforcement and financial crime, said: "We expect all firms to look hard at their reference rate and benchmark operations to ensure this type of behaviour isn't being replicated."

Many commentators now believe gold's future price is tied closely to eastern markets, with Tarek El-Mdaka, chief executive of Kaloti Precious Metals, informing Reuters that Dubai is becoming increasingly important for the precious metal.

With a $60 million (£35.4 million) refinery being built by Kaloti Precious Metals in Dubai, Mr El-Mdaka said: "The refinery is part of the next stage, making Dubai a top centre for physical gold refining and clearing."

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