chairman announces an opening price to the other four members, who relay that to their customers and, based on orders received from them, instruct their representatives to declare themselves as buyers or sellers at that price.
The gold price is adjusted up and down until demand and supply is matched, at which point the price is "fixed".
Increased regulatory scrutiny looks like the stumbling block in finding a new buyer for Deutsche's seat.
"There could be quite a few contenders but it also depends on what effect all the regulatory focus has," one gold market source said. "If regulators are going to say 'well the fix doesn't work as it is, and we have to find another way of doing it', nobody is going to want to buy that seat."
It is Deutsche's responsibility to find a buyer for the seat, who would have to meet with the approval of the other members. The price would be negotiated between the buyer and the seller. The last time a seat was sold in 2004, it cost around one million pounds, sources said.
A logical possibility would be for another of the London Bullion Market Association's market-making members, who quote two-way prices to each other during the London business day for agreed minimum quantities, to take a place at the table.
The market makers not currently involved in fixing - Credit Suisse, Goldman Sachs, JPMorgan, Merrill Lynch, Mitsui Precious Metals and UBS - all declined to comment on whether they would be interested.
A candidate is more likely to emerge among the Asian banks, sources say, as these look to raise their profile in the London market at a time when Asia is taking a more important role in the gold industry as physical metal moves eastward.
Chinese banks have increased their profile in the London gold market. Bank of China (BoC) and Industrial and Commercial Bank of China (ICBC) are both already members of the LBMA. ICBC is also about to complete the acquisition of the London commodity arm of Standard Bank, another member of the London Bullion Market Association.
Both banks declined to comment on whether they were interested in joining the fixing group.
If no buyer is found, it could potentially continue with just four members, but that is unlikely to happen. Gold traders say the benchmark still has value, helping them to hedge risk, which would be more difficult if they were negotiating sales privately with each