A UK watchdog has found no evidence of gold price rigging following an investigation.
David Bailey, head of markets infrastructure and policy at the Financial Conduct Authority (FCA), was questioned by the UK government's Treasury Select Committee whether there was collusion between banks in setting the gold price benchmark. He responded by explaining that it was possible but there was no evidence to suggest it had been carried out.
Benchmarks, including gold prices, are being put under increased scrutiny of late following a number of banks being heavily fined for rigging the Libor interest rate. There have been concerns that gold prices and currency markets could suffer the same fate but Mr Bailey stated that there was no concrete proof of this type of activity going on.
The questioning in parliament came after London banks HSBC, Barclays, Societe Generale and Scotiabank held a conference call to determine the level of supply and demand in the market. They twice set a benchmark price which determines trading in the precious metal over the working day.
Mr Bailey explained: "All benchmarks I think are susceptible to people attempting to manipulate them. They are susceptible to a variety of conflicts of interest."
The World Gold Council is set to meet in London on Monday (July 7th) to discuss changes to the gold fixing prices. The FCA will attend the summit and they will assess if there have been any signs of rigging from the banks.
High gold prices
Gold prices reached a near two month at the end of June as geopolitical tensions continued to rage across the world. Spot Gold was trading at $1,314.99 (£766.293) at 09:32 BST in London, according to Bloomberg data. The prices have been increased due to ongoing tensions in Iraq and Ukraine and represented the highest rate since April 15th, 2014.
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