Where is the gold that has been bought and sold? From the point of view of the same exchange rate, the handover location is fixed. For example, the U.S. dollar is in New York, the Japanese yen is in Tokyo, the Euro is in Frankfurt, and the British pound is in London (of course, it is not a real paper currency in circulation, but only book transfers). The transfer place of currencies of various countries is determined by their nationality or region, but gold has no nationality. The former gold-producing countries were basically British colonies (South Africa, Australia, the United States, etc.). The gold mined in the colonies was first collected in the local London and then circulated to all parts of the world, thus forming the habit of transferring gold in London. That is, if you trade gold in U.S. dollars, you will receive and pay the U.S. dollars in the U.S. dollar account of the bank in New York, and the gold in the gold account of the London bank.

The above is the origin of the term Loco London. Loco is a joint word that expresses a place. Some people think that it comes from English, and some think it comes from Latin. There are different opinions. If the gold is transferred to Tokyo, it will be “Loco·Tokyo”/Tokyo Gold; if it is changed to Hong Kong, it will be “Loco·Hong Kong”/Hong Kong Gold. In fact, if it is a physical transaction, such a local transaction will certainly exist. However, the global standard is “London gold is traded in US dollars”, and the basic transaction method is the transfer method of the account in London.

Like other currency pairs such as USD/JPY and EUR/USD, gold/USD is basically a 24-hour global transaction. As far as gold trading is concerned, the price of London gold is the basis of everything. For example, the theoretical price of Tokyo Commodity Exchange futures and the price of Tokyo’s kilogram bar gold are calculated on the basis of London gold prices. Even the retail price of gold purchased by ordinary investors in precious metal stores is ultimately determined by the price of London gold.

Like the exchange rate, the price of London gold changes rapidly. Among them, the indicator is often the “London gold fixing price”, that is, the “pricing” or “biding” at a fixed time each day. Twice a day, at 10:30 a.m. and 3 p.m. London time, global market participants suspend trading and all orders are gathered here. Find the price at which buying and selling orders are the easiest to gather, and thus determine the price of the transaction. Through the member companies, anyone can participate in public transactions that disclose the process and results. Therefore, it is used as a benchmark price for long-term trading as an indicator of global gold trading. The content of the transaction is released to the whole world, and both buyers and sellers can trade at a fair price. This structure is unique. Therefore, it can be called the only indicator price for gold trading. In addition to the London gold price, there is also an indicator that is also priced in U.S. dollars. It is often referred to as the “New York Gold Price”, and the connotation is the price of the New York Futures Exchange. Since the same calculation is based on the price per ounce against the US dollar, it is easier to confuse. It is actually a futures price. As far as the price at the same moment is concerned, please note that the London gold price is the spot price, while the New York gold price is the futures price. There is a price difference (zero or plus or minus a few dollars) between the two.

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