The Financial Conduct Authority (FCA) of UK is investigating into how gold prices are fixed in the US$20 trillion gold market, reported Bloomberg citing person familiar with the review.

Conventionally, the benchmark rate called London fix is published twice daily following a telephone call involving five financial firms including Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC Holdings and Societe Generale.

In its investigation, the British financial watchdog will look into all the aspects of gold price fixing. However, the probe is expected to be preliminary and not a formal one.

Former Barclay’s economist and chief economist at metals broker Degussa Goldhandel Thorsten Polleit was quoted by Bloomberg as saying that there is a great flaw in the London gold-fixing.

"Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge," Polleit added.

According to the London Bullion Market Association, the UK capital is the biggest gold trading center in the world.

In an interview, Pat McFadden, an opposition Labour lawmaker who sits on Parliament’s Treasury Select Committee, said that the gold market is hugely influential, and there needs to be public trust in the gold price.

"Question marks have been raised about the benchmark price of gold, and it’s important that regulators investigate," McFadden added.