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Thomson Reuters and CME favoured to manage London Gold Fix

Thomson Reuters and CME Group, which won the right to manage the daily silver fix last month, are widely tipped to take over responsibility for setting the daily price of gold.

The four banks that currently set the gold price, together with the London Bullion Market Association, called for firms to present proposals to replace the current telephone-based system.

The winning bid will be announced in October, with implementation envisaged to be completed by the end of the year, the Association said in a statement.

Thomson Reuters and CME said they will work together again to make a proposal for the new gold reference price. They said they would consult widely with gold miners and consumers to be able to provide an “authoritative” price.

Most executives seem to think that CME/Thomson Reuters are clear favourites, The Wall Street Journal reported.

It quoted a person familiar with the process saying it was clear to participants in the bid for the silver fix that it could be scaled up for other precious metals, including gold, to avoiding having to reinvent the wheel each time.

“It would be interesting to see whether some of the other companies who pitched for the silver fix will now actually step up and bother pitching for the gold fix,” said a gold dealer, who asked not to be identified. It would “look odd to have a different process in place for one than the other”.

“I’d be amazed if anyone could unseat the CME-Thomson Reuters combination,” said a precious metals analyst. “It would take something quite substantial that I can’t think of.”

The London gold fix is set twice-daily via a conference call among the four banks. It provides a benchmark for mining companies to settle sales contracts, as well as price derivatives such as exchange-traded funds. ■

The Wall Street Journal