The Proterozoic Cosmopolitan Howley gold deposit consists of quartz veins on the steeply dipping limbs of the Howley anticline and is hosted by pelitic metasediments within the high-temperature metamorphic aureole of Proterozoic granites in the Pine Creek province of northern Australia. Ore is restricted to a stratigraphic contact, always occurring within noncarbonaceous hornfels within 50 m of carbonaceous slates. Similar veins farther away from, or within carbonaceous slates, are abundant but barren. A companion paper establishes that ore formation occurred in response to hydrothermal activity accompanying granite intrusion and contact metamorphism. The involvement of a magmatic brine in ore genesis is referred on the basis of fluorine concentrations in biotite from the potassic alteration selvages of the gold-bearing veins, from stable isotopic data and from mutual crosscutting relations of veins and felsic dikes. This paper focuses on the fluid flow and chemical processes that formed the gold-bearing quartz veins. It is argued that lateral focusing of fluid flow into the subvertical vein-hosting fractures led to mixing of the ascending magmatic brine (+ or - some metamorphic fluid) with hydrocarbon-rich fluid advected through carbonaceous slate in the steeply dipping fold limbs. Crock-seal textures in some of the gold quartz veins indicate that this fluid flow and mixing were locally episodic. The magmatic brine involved in the mixing was expelled from a crystallizing I-type granite at depth (< or =1.5 km below the deposit). This granite is highly fractionated and has I-SC characteristics: hornblende, pink K feldspar, accessory sphene and fluorite and whole-rock Fe (super 3+) /Fe 2PL > or = 0.24. These features indicate a redox state of tile magmatic fluid at or above the NNO buffer. By contrast, gold deposition occurred at 2 to 3 log f o2 units below NNO, a weakly acid pH of 4.3 to 4.7, 550 degrees < or = T < or = 620 degrees C, and approx 200 MPa, from fluids with 1 to 5 m Cl. The vein sulfide paragenesis pyrrhotite + arsenopyrite + or - loellingite indicates redox conditions compatible with the local carbonaceous units. This implies a redox contrast between the regime of gold deposition and the magmatic fluid source regime. It is inferred that reduction of the magmatic brine by fluid mixing in the vicinity of carbonaceous metasediments was responsible for localized gold deposition. To evaluate this precipitation mechanism, available gold solubility data were fitted to the revised equation of state for aqueous species at high pressures and temperatures. For the high temperatures of gold quartz veining, speciation calculations with this dataset indicate that AuC (super - 2 was more important for gold transport than Au(HS) (super -) 2 and AuHS 0 . Titration calculations confirm that gold can be precipitated effectively by admixing of carbonic species and hydrogen derived by pyrolysis of carbonaceous slates. Reaction with carbonaceous matter could thus be a widely applicable god precipitation mechanism even at high temperature. However, the predicted solubility of gold is so high (typically > or =100 ppb at > or =500 degrees C) that gold availability in ordinary metasediments may be insufficient to generate an effective ore fluid for high-temperature gold deposition by metamorphic devolatilization. If correct, these predictions further emphasize the inferred role of magmatic fluids in the formation of gold deposits within high-grade contact metamorphic aureoles.