China launched yuan denominated gold bullion trading today in a move that
will further boost its power in the global gold and fx markets. Critics of
the existing pricing mechanisms hope that it will lead to increased
transparency and may end price manipulation.
The Shanghai Gold Exchange (SGE), the world’s largest physical gold
exchange, launched a yuan-denominated benchmark price today in Shanghai,
a measure that will benefit both China’s domestic gold market and the global
precious metals market.
The SGE set the price at 256.92 yuan a gram ($1,233.85/oz) at the
10:30 am session after members of the SGE submitted buy and sell orders
for gold of 99.99 percent purity according to Bloomberg. Members include
Chinese banks, jewelers, miners and the local units of Standard Chartered Plc
and Australia & New Zealand Banking Group Ltd., according to the bourse.
The SGE said in a press release that the launch of the Shanghai Gold
Benchmark Price will be useful as it adequately reflects the gold supply and
demand in China, and represents the price trend of China’s gold market and
China is now the largest producer and buyer of gold bullion in the world.
Shanghai Gold is gold bars or ingots with the standard weight of one
kilogram and a fineness of no lower than 999.9, delivered in Shanghai, and
traded via SGE price trading platform. It is quoted in yuan per gram, and
settled via the SGE platform.
“At present, China’s gold derivatives market is lacking in an
authoritative and equitable gold benchmark price which is denominated in
renminbi. The launch of Shanghai Gold Benchmark Price will facilitate the
development of China’s gold derivatives market which will also have a big
impact on the price of gold related financial products, wealth management
products and derivatives,” the release said.
Shanghai Gold Benchmark Price follows the principle which allows all
orders executed on the SGE price trading platform. The benchmark price is
determined when price and volume reach the balance during the auction period
on the SGE price trading system.
Experts said the Shanghai Gold Benchmark Price will play a significant
role in the global gold market.
According to David Marsh as quoted by the official China
Daily, Managing Director and Co-Founder of Official Monetary and
Financial Institutions Forum (OMFIM), the yuan-denominated gold benchmark
offered by SGE is a necessary addition to the international gold market and
should make the pricing of physical gold more open to the play of actual
market forces.
PBOC Says “Potential” Is “Huge”
“The Shanghai gold benchmark will provide a fair and tradable
yuan-denominated gold fix price … will help improve yuan pricing mechanism
and promote internationalisation of the Chinese gold market,” Pan Gongsheng,
deputy governor of the People’s Bank of China said at the launch in Shanghai.
“The Chinese gold market has rare opportunities for development,”
Gongsheng said. “The market capacity and potential are huge. Today’s event
will help enhance the impact of the renminbi on gold pricing,” Pan said.
Gold Prices (LBMA)
19 April: USD 1,241.70, EUR 1,095.18 and GBP 867.01 per ounce
18 April: USD 1,237.70, EUR 1,095.02 and GBP 872.45 per ounce
15 April: USD 1,229.75, EUR 1,092.16 and GBP 867.46 per ounce
14 April: USD 1,240.30, EUR 1,101.04 and GBP 874.96 per ounce
13 April: USD 1,245.75, EUR 1,100.37 and GBP 875.33 per ounce
Silver Prices (LBMA)
19 April: USD 16.20, EUR 14.33 and GBP 11.41 per ounce (Not updated)
18 April: USD 16.20, EUR 14.33 and GBP 11.41 per ounce
15 April: USD 16.17, EUR 14.33 and GBP 11.40 per ounce
14 April: USD 16.13, EUR 14.32 and GBP 11.39 per ounce
13 April: USD 15.98, EUR 14.14 and GBP 11.21 per ounce
Gold News and Commentary
Silver surges 3% to 10-month high; lifts gold (Reuters)
China Starts Gold Fixing in Bid to Expand Global Market Sway (Bloomberg)
Gold’s Best Forecasters See Rally Resuming as Confidence Returns (Bloomberg)
Gold ends in the green as Doha oil-freeze talks unravel (Marketwatch)
Gold Climbs for Second Day as Oil Selloff Adds to Haven Demand (Bloomberg)
Gold is the spectre haunting our monetary system – Rickards (Telegraph)
It’s all suddenly going wrong in China’s $3 trillion bond market –
(Bloomberg)
Silver Kryptonite? GATA Chairman Murphy Interviewed (Daily coin via Youtube)
World Energy Council: Cyber threat to world energy (City AM)
Bad smell hovering over the global economy (Guardian)
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