The price of Gold explained
In days gone by, twice a day, at 10.30am and 3pm, five men would gather in an office at Rothschilds. Each man represented a bullion bank, Rothschild, Sharps Pixley, Mocatta & Goldsmid, Johnson Matthey and Samuel Montagu and these guys decided the best price for gold.
Exactly the same happens today, except that it's all done on a conference call rather than having to physically meet, and today the five are: The Bank of Nova Scotia, HSBC, Deutsche Bank AG London, Societe Generate Corporate & Investment Banking and Barclays Capital.
One of them (the Chairman) announces an opening price to the other four who relay the price to their customers, and based on orders received from them, declare themselves buyers or sellers at that price, and state the amount of gold they wish to trade. Since it's unlikely that they will all be in agreement, the price has to be adjusted and the procedure repeated until the buy-amount and the sell-amount are the same. The chairman then declares that the price is 'fixed' for the morning (or afternoon), and this is the 'middle' price between buying and selling - the 'official' price of gold per gram for the morning (or afternoon), the actual gold price. The process takes just a few minutes.
The fix' is the 'official' price of gold at approximately 10.30am and 3pm each working day, it is generally the price we quote (when a real time price check is not possible) when someone says, 'What is the sell scrap gold price today?' - but since gold (as with every other commodity) is traded on the international markets, the price will change, and it will change from minute to minute.
Trading in gold never stops. Soon after the London market closes at 4.30pm trading starts in New York; then as New York prices vanish from the screens (at 7.30pm gmt) trading has started in Hong Kong. The gold price will 'open' in London in line with the last ('closing') Hong Kong price, which would have followed that of New York, which, in turn, would have opened in line with London's closing price.
