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What is a Gold Forward Offer Rate (GOFO)?

Gold Forward Offer Rate, or GOFO, is the interest rate at which contributors are prepared to lend gold on a swap against US dollars.

For example, if investors own gold and need to borrow dollars, they can use gold as collateral and potentially pay a much smaller rate of interest to borrow the cash than otherwise. The GOFO rate is published daily by the LBMA (London Bullion Marketing Association), and quotes are made for the 1-, 2-, 3-, 6-, and 12-month periods.