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The Gold Fix

The Gold Fix

The Gold Fix! During 2011 the gold price raised in value from $300 to almost $2000 per ounce. We can test out this theory by performing a little experiment. Let’s calculate the average price gains or losses we would have enjoyed if we had bought Gold at different times of the day from 2001 until the end of 2016.

The first test is holding Gold for a period of 4 hours. On average, Gold fell by 0.01% from Midnight to 4 am. Buying at 4 am, 8 am, and Noon would all have produced an average price rise of 0.01%. Buying at 4 pm would have produced an average price rise double that, at 0.02%. Buying at 8 pm would have produced an average of no change.

So far, it would seem as if the fund manager’s statement was right at least in the sense that Gold has tended to rise towards the end of the day. Let’s take it a stage further and calculate the average of a 16 hour holding period. This would allow for Gold to be purchased at 4 pm and sold at 8 am, so we can really test our hypothesis with some averaged results.

Buying at Midnight and selling at 4 pm produced a gain of 0.02%. Buying at 4 am and selling at 8 pm produced a gain of 0.05%. Buying at 8 am and selling at Midnight produced a gain of 0.04%. Buying at Noon and selling at 4 am produced a gain of 0.03%. Buying at 4 pm and selling at 8 am produced a gain of 0.2%. Finally, buying at 8 pm and selling at Noon produced a gain of 0.01%.

So in this analysis, the fund manager’s belief is wrong. It might have been right for the period represented by the few years leading up to 2011, but we can actually see that buying at 4 am and selling at 8 pm would have produced the best results, at least on average. However, he was right in that buying towards the end of the day would seem to produce the best short-term results.

As it happens, you would not be able to make any money with this strategy of buying and selling every day, because the retail spread in Gold is equal on average to about 0.05%, which was the maximum profit obtained. The Gold Fix

Does this investigation teach us anything about how the time of day can be used as a factor in trading Gold?

The Gold Fix

The spot Gold market is quite unusual as there is a process called the Gold Fix that happens twice each weekday, at 10:30 am and 3:30 pm London time. The 11 major banks dealing in Gold bullion are joined by conference call, and they undergo a process that ends with their agreement of a representative rate for the price of spot Gold. Essentially, what happens with the Gold Fix is that each bank matches all their buy and sell orders and derives a price from that, and then the process is repeated between the banks, giving an overall representative price which reflects an equilibrium of all trading orders.


The first turn of an hour after the final Gold Fix is at 4 pm London time. You cannot get further away from a Gold Fix than 4 pm. Could it be that the market, knowing the fix is cleared and the price is out of danger of any possible manipulation, rushes to buy at 4 pm, accounting for our finding that the largest short-term move begins at 4 pm?

The truth cannot be settled easily, but it may be far more prosaic. 4 pm London time is usually 9 am New York time, when the world’s great financial center opens for business. This time window, when both New York and London are open, sees the greatest volumes statistically in almost all global assets. Therefore the 4 pm rush might just be a case of having the most crowded room which would turn to produce the strongest price moves. Since 2001 the general direction of the price of Gold has been upwards, so it may be a tendency of directionality in general tending to begin at about 4 pm.

The Gold Fix


  1. i trade gold almost every working day

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