The U.K. Financial Conduct Authority (FCA) has launched a probe over the way gold prices are set every day in London, which is the main bullion-trading centre in the world based on data from the London Bullion Market Association, Bloomberg reports.
According to the news outlet, the London fix —a benchmark rate used by mining companies, jewellers and central banks to buy, sell and value gold— may have been subject to manipulation in the last few months.
Four traders interviewed by Bloomberg acknowledged that, while difficult, “insider trading” around the gold fixing is highly possible, as dealers and their clients use information from the talks to bet on the outcome.
Last week, an unidentified source familiar with the matter told Bloomberg the FCA was beginning to investigate the matter as part of a wider investigation into how global rates are set.
Financial markets have come under serious scrutiny after the Libor (London Interbank Offered Rate) probe last year revealed that the London interbank offered rate was being manipulated.
Worldwide regulators are looking into the gold market as the price of the metal has fallen 26% this year and is heading for the first annual drop since 2000.