Fooling the Fix: How One Trader Moved the Gold Market

In 2014, Barclays was fined £26 million by the UK Financial Conduct Authority (FCA) for serious failings in its role in setting the gold price. For gold investors, this case exposed how even trusted institutions could distort key benchmarks that underpin pricing across the precious metals market. The FCA also banned Daniel James Plunkett, a Barclays trader, for manipulating the London gold fix to benefit the bank’s books at a client’s expense.

The misconduct took place on 28 June 2012, just one day after Barclays had been fined £290 million for manipulating the Libor benchmark. This back-to-back revelation was alarming to markets, revealing how poorly monitored some of the most important price-setting mechanisms truly were — including gold.

The Digital Contract and the Stakes

On 28 June 2011, Barclays entered into a complex financial instrument known as a “digital option” with a client identified as Customer A. The contract hinged on two observation dates: 28 June 2012 and 20 June 2013. If the price of gold fixed above \$1,558.96 on the first date, Barclays would owe the client \$3.9 million.

If the price fell below, Barclays would keep the premium and owe nothing. Plunkett was responsible for pricing and managing Barclays’ risk on the contract. A portion of any resulting profit would be booked to his trading account.

As the June 2012 fixing date approached, Plunkett showed a clear awareness of the financial significance. In internal emails, he referred to the Digital as his “main event” and expressed hope for a market drop, writing he was “hoping for a mini puke to 1558 for fixing.” On the morning of the fix, he reiterated: “hopefully we fix 1558, or 1558.75 ideal.”

The 3pm Gold Fixing – 28 June 2012

As a Gold Fixing Member, Barclays participated in the twice-daily process of setting the global gold price. The 3:00 p.m. fixing on 28 June 2012 was conducted by phone among five banks. At the outset, the price was proposed at $1,562.00 but dropped quickly to $1,556.00 due to market movements unrelated to Barclays.

A 52,000oz Short

At 3:06 p.m., with the proposed fixing price back up to \$1,558.50—just under the barrier—Plunkett entered a large sell order of between 40,000 and 60,000 ounces (100–150 bars), enough to influence Barclays’ declared position as a net seller of 52,000 ounces. This increased overall selling pressure.

Spoofing at the Strike Price

Once the price appeared likely to drop below the barrier, Plunkett suddenly withdrew the order. This action brought the imbalance between buyers and sellers within the threshold that allowed the Chairman of the Fixing to declare the price as fixed. At that moment, the price was holding at $1,558.50—just below the client’s barrier level.

A New 60,000oz Sell Order

Moments later, as buying pressure began to increase and the price risked rising above the barrier, Plunkett re-entered another large sell order of 60,000 ounces. Barclays’ declared net selling position became 40,000 ounces. This move ensured the market imbalance remained within the range needed to finalize the price. At 3:10 p.m., the gold price was officially fixed at \$1,558.50.

As a result, Barclays avoided the $3.9 million payout to Customer A, and Plunkett’s trading book profited by $1.75 million (excluding hedging). This shows how incentivised the bank was to keep the price artifically lower than the strike price at the afternoon Gold fix

The London Gold Fix began in 1919 at Rothschild’s offices. The first price: £4.94 per ounce

The Gold fix happens twice a day, at 10:30 AM and 3:00 PM London time. In 2015, the London Gold Fix was replaced by the LBMA Gold Price

Aftermath and Investigation

Shortly after the fixing, Customer A noticed the price had settled just below the barrier and requested clarification. Barclays forwarded the inquiry to Plunkett, who responded by citing market conditions and the drop in August COMEX Gold Futures but failed to disclose his own trading activity during the fix.

Over the next two days, Plunkett continued to withhold this information from Barclays’ Sales Desk and Compliance team. It wasn’t until 2 July 2012, after a weekend, that he voluntarily disclosed that he had traded during the fixing. However, during Barclays’ internal investigation, Plunkett continued to mislead investigators by giving an account of events that omitted the true rationale behind his trades. He repeated this untruthful narrative when interviewed by the FCA.

Ultimately, Barclays reimbursed Customer A the full amount the client would have received had the gold price fixed above the barrier

Regulatory Consequences

The FCA concluded that Plunkett had violated two critical regulatory standards: Statement of Principle 1 (failing to act with integrity) and Statement of Principle 3 (failing to observe proper market conduct). His actions were deemed deliberate and intended to benefit his own trading book at the expense of a client.

The FCA stated that Plunkett’s behaviour posed a serious threat to the integrity of the UK and international financial markets. As a result, the Authority imposed a financial penalty of £95,600 (after a 30% settlement discount from the original £136,600) and issued a prohibition order preventing him from working in any regulated financial role indefinitely.

Calculating the Penalty

The penalty was calculated under the FCA’s five-step framework. Since no direct financial gain from the manipulation accrued to Plunkett personally—he received no bonus and his employment was later terminated—there was no disgorgement under Step 1. Step 2 assessed a base penalty of 40% of his relevant income (£284,766), equating to £113,906. Aggravating factors, including misleading investigators and trading the day after Barclays had been fined for LIBOR manipulation, led to a 20% uplift, bringing the total to £136,688. A Stage 1 settlement discount of 30% reduced the final penalty to £95,600.

A Range of Investment Grade Bullion Products

Barclays Bank

Market Fraud

The case of Daniel Plunkett highlights how benchmark manipulation can occur even within long-established financial institutions. It demonstrates how traders with insider access to market mechanisms like the Gold Fixing could influence outcomes to benefit proprietary positions—often to the detriment of clients.

Plunkett’s actions, though involving a single fix, had broader implications for trust in benchmark pricing. The FCA’s Final Notice made clear that such conduct is incompatible with the responsibilities of a regulated individual and underscored the need for integrity in all aspects of market participation.