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A reference price for gold is set on a daily basis. Until recently (early 2015 for gold and late 2014 for silver) this was done behind closed doors by a small group of banks. Each year, a different bank played the role of chairman, which means that this bank is the Gold price or Silver price for that day. Then all the banks indicated how much gold or silver they wanted to buy and sell at the mentioned price. This continued until a price was reached at which supply and demand were close enough to each other.
Recently, this method of fixing has been replaced by an electronic platform on which participating banks can enter their buy and sell orders. This new electronic fixing of gold, silver, platinum and palladium is carried out by a department of the LBMA. These reference prices can be consulted on the LBMA website.
The old gold price fixing explained (Source: Wall Street Journal)
