London fix to be reformed

Banks are considering an overhaul of London’s century-old gold benchmark used by mining firms, jewellers and central banks to buy, sell and value the precious metal, according to a person with knowledge of the process. The five banks that oversee the London gold fixing – Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC and Société Générale – have formed a steering committee that is seeking external firms to advise how the process could be improved, according to the person, who asked not to be identified as the review is not public. The fixing refers to a rate-setting ritual dating to 1919 in which representatives of the five member banks speak by telephone from a couple of minutes to more than an hour about buying and selling gold. The method has faced scrutiny recently, with regulators in London, Bonn and Washington – who are already looking into manipulation of interest rates and currencies – investigating how prices are set in the market. – Bloomberg

Average price forecast: $1 219

Gold would average $1 219 an ounce this year and gain as much as 10 percent from now, after posting its biggest annual decline in three decades last year, a London Bullion Market Association (LBMA) survey of traders and analysts showed yesterday. The metal would reach $1 379 and trade above $1 067 all year, the mean response of 28 participants showed. Prices slumped 28 percent last year, the most since 1981, and averaged $1 411, a three-year low. Silver would rise as much as 19 percent to $23.94 an ounce by December, platinum 13 percent to $1 650 and palladium 16 percent to $863.21, the LBMA said. Bullion fell last year for the first time since 2000 and more than $73 billion (R792bn) was erased from the value of gold-backed funds as some investors lost faith in the metal as a store of value. – Bloomberg

African Barrick production up

Tanzania-focused producer African Barrick Gold beat its production guidance for last year while cutting costs in the fourth quarter, and pledged yesterday to do more to improve operational efficiency. However, a lower gold price would mean a cut in reserves at its Bulyanhulu project, as the FTSE 250 company switched to using a gold price of $1 300 (R14 100) an ounce for its calculations from $1 500. The firm said it produced 641 931 ounces of gold last year, beating its guidance by 7 percent on strong performances from its North Mara and Buzwagi mines. Cash costs in the fourth quarter were $774 an ounce sold, well below guidance of $925 to $975 an ounce given by Bradley Gordon, who was appointed chief executive in August last year. – Reuters