China’s gold exchange gains traction

OWNx Team Money & Financial Technology 0 Comments

Foreign banks and trading houses have signed up for China’s planned global gold exchange. New members and major players in the industry are intrigued to have access to China as the biggest gold consumer worldwide and to trade commodities in the yuan currency, according to Reuters.

China seeks to challenge the dominance of London and New York in trading and the strong reaction from foreign players is supporting this goal. By gaining pricing power over the metal, China will further establish its leadership as the primary golden global leader.

Ten more companies than originally expected signed up for the Shanghai Gold Exchange. Though 30 companies were approached for the first round of membership, 40 have signed up before the exchange launches in just one month.

The global trading community will watch the exchange closely since “gold is one of the first commodities that China is opening up to foreign players by allowing them to participate directly in physical trade and to use offshore yuan,” according to the article.

The article also explains that operations will begin on Sept. 29 in the Shanghai free-trade zone, with three yuan-denominated physical gold contracts of 100 grams, 1 kg, and the bigger London gold delivery bar weighing 12.5 kg.

“It is too important a market to stay away,” said Bernhard Schnellmann, director of Swiss-based Argor-Heraeus, one of the world’s biggest gold refineries, which is consider joining. “I think the SGE will be successful with this new exchange as they have a big home market and there should be enough liquidity.”

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