* LBMA benchmark replaces the London gold fix
* ICE Benchmark Administration operating new process (Adds background, comment)
By Jan Harvey
LONDON, March 20 (Reuters) - The new London Bullion MarketAssociation (LBMA) Gold Price went live for the first time onFriday, with Goldman Sachs and UBS joining thefour members of the now defunct gold "fix" in setting itselectronic replacement.
Goldman and UBS joined Barclays, HSBC,Bank of Nova Scotia and Societe Generale toset the new benchmark gold price, administered by ICE BenchmarkAdministration, at 1030 GMT on March 20.
The first LBMA Gold Price was set at $1,171.75 an ounce,after five rounds of an auction to strike a balance between bidsand offers.
"The London gold fixing was eclipsed today," Ross Norman,chief executive of Sharps Pixley, said. "The key question is,will users have the necessary confidence in the number? My gutfeeling is that, with six participants, yes is the answer."
ICE Benchmark Administration (IBA) was named by the LBMA inFebruary as the new gold price benchmark operator. From Friday,it will provide the price platform and methodology as well asthe overall administration and governance for the LBMA GoldPrice.
"It's a natural progression to go down the route of anelectronic, transparent mechanism," said Matthew Keen, formerlya director for gold fixings at Deutsche Bank, now at JeffriesBache.
The London gold fix, set twice a day since 1919, mostrecently by conference call, was widely used by producers,consumers and investors to trade and value the metal.
Along with the silver, platinum and palladium fixes, it cameunder increased scrutiny in the wake of a scandal in financialmarkets over rigging of interest rate and foreign exchangebenchmarks, most notably Libor.
Deutsche Bank gave up its seat at the fix early last yearafter failing to find a buyer for it. Representatives from thefour remaining banks involved in the process later said they toowould no longer take part.
Three exchanges now run price benchmarks for gold, silver,platinum and palladium. The London Metal Exchange has produced aprice for platinum and palladium since December, while theChicago Mercantile Exchange, jointly with Thomson Reuters,administers the silver benchmark.
Those in the wider market say the new processes for settingprecious metals benchmarks has not led to much of a change inthe way they operate.
"The new auctions haven't really changed the way peopleexecute business," one precious metals trader said. "For us, aslong as there's some form of pricing mechanism, we're happy." (Reporting by Jan Harvey and Clara Denina; Editing by VeronicaBrown and David Evans)