Who Does Control Gold Bullion Market Prices?
Some think that if gold bullion is a commodity, gold bullion market prices in the free economy should be controlled exclusively by the supply and demand, or gold buyers and gold producers. This is only partially true but not entirely. Gold bullion is a special type of commodity that is controlled by the spot price of gold and international financial interest rates. This is due to the fact that banks hold substantial gold assets and use them for hedging purposes, also lend and borrow them depending on the market situation. Therefore, market price of gold uses a more complicated dynamics model rather than a simple supply and demand curve.
However, in today’s’ economy there are many other complex factors that directly or indirectly control gold bullion market prices. Government and major financial institutions’ policies and regulations have tremendous effect on the gold bullion market.
London Over the Counter Market is the main financial hub in the world for gold trading that plays a tremendous role in the establishing of gold bullion coins prices. New York Comex Exchange, Tokio’s Tocom Exchange markets are the largest gold trading establishments in the worlds that still end up clearing through the London OTC market. It’s fair to say that London gold fixing procedure plays one of the most important roles in gold bullion prices all over the world since major trades go through their system. The spot price of gold is established twice per day based on the balance of gold trading activities. The gold bullion market prices are calculated in three major world currencies, namely, USD, GBP and EURO precisely at 10:30 am and 3:00 pm London local time.