Many people think that the price of gold for buyers and sellers is determined through the LMBA Gold Price Auction (formerly LBMA Gold Fix). This is not correct.
The LMBA Gold Price Auction does not set the price of gold and thus all other gold-related products for the whole day. In fact, the LMBA Gold Price is simply the price agreed to at that point in time (10:30am and 3:00pm); within minutes, the price of gold will fluctuate again based upon the so-called London Spot Price.
The London Spot Price is the basis for many transactions in gold. Actually it is a quotation made by dealers based on US dollars per fine ounce gold.
The London Spot Price is actually the quotation price of gold between Citi, Goldman Sachs, HSBC, JPM, UBS, Bank of Nova Scotia, ICBC, Merrill Lynch, Morgan Stanley, Societe Generale and Standard Chartered Bank based upon their activity in the hardly regulated OTC market.