Gold's price history

The city of London emerged as a metals trading centre in the late 17th century. It is widely considered to be the birthplace of the official gold price.

In 1696 the Bank of England brought gold to greater prominence when it informally established the world’s first gold standard. The Great Recoinage shifted the balance of coins in circulation from silver to gold. By the early 18th century, London’s position as the focus of international gold trade was secure, with the bulk of global gold finding its way to and through the city.

In 1717, Sir Isaac Newton, then the Master of the Mint, set the gold price at £4 8s 9d (£4.25) per troy ounce. This level remained largely unchanged for the following two hundred years.

During the 19th century, other nations became increasingly important gold market participants. The California gold rush, along with discoveries in Australia and South Africa, prompted a significant increase in global supply - and the emergence of a gold trade that bypassed London.

By the late 1800’s, several countries had officially adopted the gold standard, causing London to lose some of its authority as the world’s gold ‘centre’. The Bank of England was keen to return London to the forefront of global gold trading activity.

In 1919 the Bank of England signed an agreement with seven South African mining houses to ship their gold to London for refining. These mining houses agreed to sell all of their gold through the banking house N.M. Rothschild, with the price agreed upon by five members. The London fixing was thus established.

In today’s market, trading on several exchanges - of both physical gold and gold derivatives - determines the daily gold price, with the traditional gold fix still serving as the benchmark price. This fix is set twice daily at 10am and 3pm. In 1968 N.M Rothschild introduced the latter fix to coincide with the opening of the US markets. This price is now considered to be the more important of the two.

Though the process through which the fix is agreed has barely changed since its inception, none of the original member banks remain. Rothschild was the last to leave, resigning its chairmanship in 2004.

The current members are the Bank of Nova Scotia-Scotia Mocatta, Barclays Bank, Deutsche Bank, HSBC Bank USA, and Société Générale - with an annually rotating chairmanship. The fix reports the gold price in three currencies: US dollars, Sterling and Euros, per troy ounce.

Given the importance of US markets and the dollar as the world’s reserve currency, traders most frequently quote the US dollar price.