China launches gold benchmark prices in its attempt to influence global market

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China, the world’s biggest consumer and producer of gold, has begun a daily price fixing as part of its efforts to increase its influence in the global market for the yellow metal.

The yuan-denominated gold fix was launched on the Shanghai Gold Exchange.

Eighteen banks and bullion traders have been chosen as initial market makers for the fix, including 10 Chinese lenders, Standard Chartered Bank, Australia and New Zealand Banking Group and six domestic and international bullion traders including Switzerland-based MKS Gold Ltd, Chinese media quoted the exchange as saying.

The strategic move, coming a decade after China started to reform the gold market, of setting a new gold fix price also supports the internationalization of the yuan, an industry analyst from one of auction participants told Shanghai Daily. It will add pressure on the century-old London gold fix price.

China, which resumed its regularly reporting of bullion buying in July after a six-year gap, bought an impressive 103.9 tons in the second half of 2015, according to World Gold Council. China’s gold reserves have ballooned by 708.2 tons since April 2009, the council added.

Hong Kong and Singapore have also recently launched exchange-traded contracts.

 

 

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