The LBMA Gold Price: How London Sets Gold's Benchmark Twice a Day

When you browse the financial media on gold, you'll inevitably come across the terms 'LBMA Gold Price AM' and 'LBMA Gold Price PM'. They are two benchmark prices that are determined each day in London and used to value mining royalties, to calculate net asset values of exchange traded funds and to settle contracts globally.

A short history: from the gold fix to a modern auction

The London gold price has been around for over 100 years. Five London bullion banks started meeting at N M Rothschild & Sons on 12 September 1919 to arrange a daily gold 'fix'. Buyers and sellers were matched by telephone, increasing or decreasing the price until balance was reached. That system, known as the London Gold Fix, operated with modifications until 2015.

Investigations into financial benchmarks, sparked by scandals in the early 2010s, led the market to a more transparent, electronic process. The LBMA Gold Price came into use on 20 March 2015, replacing the London Gold Fix. ICE Benchmark Administration (IBA) operates the auction platform; the LBMA administers the benchmark and owns the intellectual property.

At what time is the price determined?

There are two auctions each London business day:

• LBMA Gold Price AM: 10:30 London time - covering Asian and European business hours.
• LBMA Gold Price PM: 15:00 London time - covering the opening of U.S. hours.

London is on Greenwich Mean Time (GMT, UTC+0) in winter and British Summer Time (BST, UTC+1) in summer. In New York standard time, the AM auction is 5:30 a.m. ET and the PM auction is 10:00 a.m. ET. Always check the current London time rather than memorising a local equivalent, as U.S. and UK daylight saving transitions can differ by a week or two.

Auction procedure

The process is an electronic, tradable e-auction run in rounds:

1. The chairperson sets an opening price, typically the current spot price just before the auction.
2. Participants place orders specifying the ounces they wish to buy or sell at that price. Direct participants are LBMA-approved banks and bullion dealers, who can also place orders for clients.
3. The platform compares total buy and sell volumes. If they are not in balance within a designated tolerance, a new round begins at an adjusted price - upward if demand exceeds supply, downward if supply exceeds demand.
4. The auction closes when buy and sell orders balance within the tolerance. The benchmark price is set and matched orders are executed.

Orders are binding and tradable, meaning participants have real skin in the game. This is one of the reasons regulators regard the benchmark as robust.

The benchmark is set in USD per fine troy ounce and is also issued in pounds sterling and euros at the exchange rates prevailing at the time of the auction.

What gold does the benchmark cover?

The LBMA Gold Price applies to Good Delivery gold bars - approximately 400 troy ounces (350 to 430 oz range) with a fineness of 995 parts per thousand. These are the large bars traded between central banks, refiners and bullion banks, not the small bars and coins sold to individual investors.

Why it matters

• Valuation. Gold-backed ETFs and funds use the LBMA Gold Price to value their holdings.
• Contracts. The AM or PM price is used in mining royalty and streaming agreements, jewelry supply contracts and central bank transactions.
• Historical reference. The benchmark provides a consistent, published series that allows analysts to compare gold prices across time.

The LBMA price is not a real-time spot price - it is a snapshot taken at one point in time. Spot trades continue between and after auctions and can vary by a few dollars from the benchmark on volatile days. For comparison, there is one LBMA Silver Price, fixed once a day at 12:00 noon GMT.

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Disclaimer: This article is for general education only and is not financial, investment, tax or legal advice. Benchmark rules and times can change; confirm current details with the LBMA and ICE Benchmark Administration.