, Columnist
Gold Trading Systems Experience Growing Pains
How competition pushed the benchmark below the spot price last week.
Name your price.
Photographer: Jason Alden/BloombergThis article is for subscribers only.
On the afternoon of April 11, London’s daily gold price benchmark fix took a peculiar turn: It was about $12 under the spot price. The auction appeared to be stuck on a descending escalator from an initial $1,265.75, before fixing at $1,252.90.
Such a discrepancy affects many participants in the global gold markets -- hedgers and speculators, along with miners, refiners and jewelers, as well as banks and portfolio managers. But there was no mention of fat fingers. The initial reports attempting to explain this anomaly pointed to a new algorithm that U.S.-based Intercontinental Exchange, known as ICE, began using to determine prices, as a replacement for the standard auction chair setting the price.