London gold market is not a real trading place, but an invisible market connected by the sales networks of major gold merchants.
The London gold exchange is often called the European gold exchange. Represented by London Gold Exchange Market and Zurich Gold Market. Investors' transaction records are only reflected in the "gold passbook account" opened by individuals in advance, and there is no need to withdraw physical gold, which saves the steps of transportation, storage, inspection and identification of gold, and the difference between the buying price and the selling price is smaller than that of physical gold. There is no fixed place for this kind of gold trading. In the London gold market, the whole market is composed of the interconnection between major gold merchants and their subordinate companies, and transactions between gold merchants and customers are conducted by telephone and telex. In Zurich gold market, the three major banks buy and sell for customers and are responsible for settlement.
Gold pricing mechanism in London gold market
Gold pricing in London is carried out in the "Golden House". The so-called "golden house" is not a house built with gold. It's an office specializing in gold trading at the company headquarters in Lochiel. From 19 19 September 12, the representatives of the five major gold banks in London met for the first time in the "Golden House", and the pricing system of the London gold market was formed, which continues to this day.
The five major gold banks set gold prices twice a day at 10: 30 am and 3: 00 pm respectively. At this time, the gold merchants will first suspend the quotation, and the chief representative of Lochiel will set a suitable opening price according to the price of the New York gold market after the London market was closed the night before and the price of the Hong Kong gold market that morning. Representatives of the other four companies sat around the "golden house" and immediately reported the opening price to the trading room of their respective companies. The trading rooms of each company immediately trade according to this price, and inform their customers of the latest gold price by telephone or telex, and present their prices on the computer system terminals of their trading rooms through Reuters. When each representative receives the order business, he will add up all the trading orders to see whether they are buying more or selling more, or whether the buying and selling are balanced, and then tell the chief representative of Lochiel Company the data information in simple jargon to adjust the price. If the opening price is too high and there are no buyers in the market, the chief representative will lower the price of gold; If the opening price is too low, it will raise the price of gold until a seller appears. Pricing transactions set new prices based on this relationship between supply and demand. The final price of pricing is the transaction price. The length of pricing depends on the market supply and demand, ranging from less than 15 minutes to 1 hour. After that, the new price will soon be passed on to traders all over the world.