CFTC Looking at London Gold, Silver Fix: Report

Source: World Gold Council

The top U.S. derivatives regulator has started internal discussions on whether the daily setting of gold and silver prices in London is open to manipulation, the Wall Street Journal reported, citing people familiar with the situation.

The Commodity Futures Trading Commission (CFTC) has not launched a formal investigation into the matter, but it is examining various aspects of price fixings, including whether they are sufficiently transparent, the paper said in its online edition.

Those discussions come after the Libor rigging scandal that exposed widespread manipulation by British banks, including Barclays, of the interest rate setting benchmark and has increased scrutiny by global regulators of other money market benchmarks.

The CFTC's main press office did not immediately respond to requests for comment.

CFTC Commissioner Bart Chilton, attending the annual Futures Industry Association conference in Boca Raton, Florida, declined to specifically address the newspaper's report.

"Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks - many other benchmarks - are legit areas of inquiry," Chilton told Reuters.

The Madrid-based International Organisation of Securities Commissions (IOSCO) is investigating how to better supervise these financial reference points and restore market confidence in them.

CFTC Chairman Gary Gensler is a member of the IOSCO task force, which is due to report on its findings in late spring or early summer.

Gold prices are set twice daily by five banks via teleconference, while three banks set silver prices. Those fixings are used to determine spot prices for the billions of dollars of the two precious metals traded each day.