China remains largest spot gold trading market

Beijing (July 9)  China has retained its position as the world's largest market for spot gold trading for the eighth year, with growing participation of offshore investors fueling trade growth, the Shanghai Gold Exchange said Thursday.

Trading of gold surged 166 percent in the first half to 17,520 tons, while that of silver jumped 151 percent during the same period to 380,000 tons.

Gold and silver trading totaled 4,764 tons and 525 tons respectively during the period at an international board set up for offshore investors in the China (Shanghai) Pilot Free Trade Zone in September.

The World Gold Council estimates demand for bullion from China and India, the world's top two buyers, will stand between 900 tons to 1,000 tons this year.

Other than being the world's largest producer and consumer of the precious metal, China is also striving for a greater say in the pricing of gold.

The Shanghai Gold Exchange will establish a gold fixing system denominated by the Chinese yuan by the end of this year in a bid to compete with London and the US Comex over pricing of the precious metal.

Currently the pricing of gold is dominated by Western markets, as the UK and US account for more than 90 percent of gold trading. China's onshore gold market accounted for 4 percent in 2013, said ANZ.

"The opening-up of China's gold market to international investors could provide a sharp boost to trading volumes on the exchange," ANZ chief economist Warren Hogan wrote in a research note in March.

The tendency of the Chinese market to trade at a discount or premium to the global spot price could lure investors to the exchange, with the pricing of the contracts in yuan being another attraction, Hogan said.

Source: GlobalTimes.cn