China One Step Closer to Becoming World’s Gold Hub
By: GoldCore
GoldSeek.com
Wednesday, 6 May 2015
– Shanghai Gold Exchange one step closer to becoming the globe’s major gold hub
– China tests system at Shanghai Gold Exchange (SGE) to establish yuan-denominated gold price fix
– SGE opened last year allowing trade in physical gold as opposed to electronic futures contracts on COMEX
– Yuan fix, which has broad regional support, will rival the century old LBMA fix
– China now world’s largest producer and buyer of gold
– Chinese government, central bank and people have affinity towards gold
China, the world’s largest gold producer and buyer, feels its market weight should entitle it to be a price setter for gold bullion. It is asserting itself at a time when the established benchmark, the century old London ‘gold fix’, is under scrutiny because of long-running allegations of price manipulation.
The new Chinese gold price benchmark may be launched before the end of the year.
The Shanghai Gold Exchange (SGE) opened last year and trades in contracts for physical gold (1 kilogram). It has quickly been establishing itself as the fastest growing gold trading hub in the world as many participants in the gold market move away from the COMEX.
Many investors and miners have grown disillusioned with the COMEX system due to concerns that the price of gold is being manipulated lower by dumping contracts for vast amounts of gold onto the market which leads to sharp price falls and curtails positive sentiment and momentum in the gold market and reduces investment demand.
The new yuan benchmark is set to rival the century old LBMA system. It has broad regional support with the participation of foreign banks as well as those from China including western banks.
“Top Chinese banks including Industrial and Commercial Bank of China (ICBC) and Bank of Communications are members of the exchange, along with foreign banks Australia and New Zealand Banking Group, Standard Chartered and HSBC, among others,” according to Reuters.
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