Gold Price Manipulation? - U.S. Probes

Gold Price Manipulation?  - U.S. Probes

via Wall Street Journal:

U.S. regulators are scrutinizing whether prices are being manipulated in the world's largest gold market, according to people familiar with the situation.

The Commodity Futures Trading Commission is examining the setting of prices in London, in which a handful of banks meet twice daily and set the spot price for a troy ounce of physical gold, the people said.

The CFTC is looking at issues including whether the setting of prices for gold—and the smaller silver market—is transparent. No formal investigation has been opened, the people said.

The inquiry comes as regulators expand their review of global financial benchmarks in the wake of an interest-rate rigging scandal. Three large banks have agreed to pay a total of $2.5 billion in penalties over alleged manipulation of the London interbank offered rate, or Libor, and more than a dozen financial firms are still under investigation.

It also helps determine the value of derivatives whose prices are tied to the metals. U.S. commercial banks had $198 billion of precious metals-related contracts outstanding as of Sept. 30, 2012, according to the Office of the Comptroller of the Currency.