Global: London gold rate may have been rigged for a decade

The London benchmark used to price much of the world’s gold may have been manipulated for as long as a decade, according to new research.

New York University Stern School of Business Professor Rosa Abrantes-Metz and Moody’s Investors Service managing director Albert Metz released a draft research paper that reports say shows irregular trading patterns at the time when gold prices are set between dealers. It’s evidence of possible collusion, the researchers said, and should be investigated.

According to the report, “the structure of the benchmark is certainly conducive to collusion and manipulation, and the empirical data are consistent with price artificiality.”

The work has not yet been submitted for publication.

The researchers suggest that Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC and Societe Generale could possibly be responsible for the alleged collusion; those banks are responsible for overseeing the gold benchmark setting.

The findings come as regulators continue probing allegations of foreign exchange benchmark rate manipulation, which follows the worldwide LIBOR scandal in which major banks were found to have manipulated the LIBOR interest rate benchmark.

Full Content: Bloomberg

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