Until about three years ago, the gold fixings took place at the premises of N.M. Rothschild and Sons Ltd., with each bank sending a representative who would remain in contact with his dealing room by telephone. When Rothschild moved out of the commodities business, it was replaced at the fixing by Barclays.
In those days, each representative had a small British flag that they raised after receiving any change from their dealing room. As long as any flag was raised, the chairman could not declare the price as fixed. Now they say "flag up" or "flag down" depending on whether they agree to the fixing price.
London developed as a gold centre in the second half of the 19th Century, when it became the point through which gold from the mines of California, South Africa and Australia was refined and sold.
Its history as a hub for trading in gold bullion goes back even further, to the formation of the oldest original member of the market, Mocatta and Goldsmid, in 1684.
These days, investment funds are taking keen interest in physical gold, with about $13 billion in trades passing through London's clearing system each day. To avoid cost and security risks, bullion is not usually physically moved and deals are cleared through paper transfers.
On November 7, the same day the gold fixing price reached its recent high, spot gold hit a 28-year high of $845.40, less than $5 away from its record high of $850, spurred by a lifetime low dollar and historic high oil.
During the recent rally, jewellers and other gold users stayed on the sideline, watching the bull run, while individuals around the world sold old ornaments and gold bars to take advantage of high prices.
Small investors were looking at coins and bars, not wishing to miss the bus.
The wider media coverage of high prices also attracted investments into exchange traded funds (ETFs), which allow people to buy the metal on a stock exchange without taking physical delivery of the metal.
Gold held in U.S.-listed StreetTRACKS Gold Shares, the world's largest gold-backed ETF, rose to a record high of 599.50 tonnes in early November.
"We continue to see a huge amount of retail inflows. They are not generally the first to the party and they are generally not the first to leave either," said Stuart Thomas, managing director of World Gold Services, sponsor of StreetTRACKS.
