The Gold Reserve Act shifted U.S. monetary gold to the Treasury and reset the official price of gold from $20.67 to $35 per ounce. This higher official price became a key reference point later used in the Bretton Woods exchange-rate system.
Delegates from 44 Allied nations met in Bretton Woods, New Hampshire, to plan rules for exchange rates and international financial support after World War II. The agreements created the IMF and helped establish a system where currencies were tied to the U.S. dollar, and the dollar was tied to gold at an official price.
The IMF’s Articles of Agreement formally took effect, putting Bretton Woods rules into operation. This created a framework for fixed exchange rates and for using gold (directly or through the U.S. dollar) as the anchor for currency values.
London’s daily gold price-setting mechanism (the gold fixing) restarted, restoring a central marketplace for wholesale gold trading. This mattered because official and private demand could now meet in a more visible market, making price pressures harder for governments to ignore.
The London market price for gold jumped sharply and moved above $40 per ounce, far above the official $35 level. This surge reflected fears about the dollar’s future value and showed how private-market demand could threaten the Bretton Woods gold-dollar link.
The United States and seven European central banks agreed to coordinate gold sales and purchases in the London market to keep the price near $35 per ounce. In practice, this meant using official gold reserves to meet private demand when the market price tried to rise above the official level.
For several years, the Gold Pool generally succeeded at limiting sharp upward moves in the London gold price by supplying gold during buying waves. However, this stability depended on continuing willingness of governments to spend gold reserves to support the $35 peg.
The United Kingdom devalued the pound from $2.80 to $2.40, a major shock in the fixed-rate Bretton Woods environment. The devaluation weakened confidence in official exchange-rate promises and helped fuel renewed demand for gold as a safer store of value.
After an intense wave of buying, U.S. authorities requested that London’s gold market close to prevent disorderly conditions. The UK declared a bank holiday on March 15 as officials prepared emergency talks among key central banks over the weekend.
Seven former Gold Pool participants agreed to separate official gold transactions (kept at the $35 price) from private-market gold trading (allowed to float). This “two-tier” approach aimed to protect central-bank reserves by ending routine official sales into private markets.
After the March shutdown and policy changes, London’s gold market resumed with a restructured fixing process. The fixing began being quoted in U.S. dollars and moved to a recognizable twice-daily format, reflecting how the gold market was adapting to the post–Gold Pool environment.
By March 1968, the Gold Pool had effectively ended, showing that coordinated gold sales were no longer enough to keep private demand aligned with the official $35 price. The collapse left Bretton Woods more dependent on capital controls and policy cooperation, and it foreshadowed later moves away from gold-backed convertibility.
London Gold Pool and official gold market interventions (1961–1968)