How is the gold spot price determined?

The price for gold bullion, measured in fine troy ounces, is fixed twice a day in London to allow market users to trade gold at a single level.

Yesterday the spot price for gold bullion hit its highest level so far this year, at $1,790, fuelled by renewed concerns over Washington printing more money in the form of QE3. But how is the spot price for gold determined or, to use the industry terminology, 'fixed'? The fixing prices are the basis for metals contracts between dealers, refiners, and miners worldwide. Each is made by the five members of the London Gold Market Fixing, who together find the single spot price for physical delivery subject to a two-day settlement regime. (Silver is fixed daily at noon by members of the Lo...