Golden chance

SGE, world largest phys­i­cal bul­lion ex­change, says in other talks about sim­i­lar co­op­er­a­tion

China Daily (USA) - - FRONT PAGE - By WUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

China links gold mar­ket with Dubai.

Shang­hai Gold Ex­change and Dubai Gold and Com­modi­ties Ex­change signed an agree­ment on Fri­dayin Shang­hai which makes the DGCX the first for­eign ex­change to use the SGE’s ren­minbi-de­nom­i­nated gold bench­mark.

The SGE is in talks with other ex­changes about sim­i­lar co­op­er­a­tion, ac­cord­ing to an SGE cir­cu­lar.

SGE is the world’s largest phys­i­cal bul­lion ex­change. The ren­minbi-de­nom­i­nated gold bench­mark, also known as Shang­hai Gold was launched in April this year. It is one of China’s ef­forts to earn more say over pric­ing of the pre­cious metal and in­crease its in­flu­ence in the global gold mar­ket.

China is among the world’s largest pro­duc­ers, con­sumers and im­porters of gold, and it de­serves pric­ing power that matches its po­si­tion. It should have more say in an in­dus­try long dom­i­nated by Lon­don, which sets global spot prices, said an­a­lysts.

In an in­dus­try meet­ing last week in Sin­ga­pore, Jiao Jinpu, pres­i­dent of SGE, said the ex­change would col­lab­o­rate with var­i­ous ex­changes and au­thor­i­ties so that ex­ter­nal ex­changes will start us­ing the Shang­hai Gold bench­mark as a ba­sis for de­vel­op­ing de­riv­a­tives.

“The world is look­ing to the East and we are look­ing to the fu­ture,” Jiao said.

By the end of Septem­ber, SGE’s in­ter­na­tional bourse has had trans­ac­tions of 7,838 met­ric tons of gold with a com­bined value of 1.96 tril­lion yuan ($289 bil­lion).

Although the num­ber of SGE’s cur­rent in­ter­na­tional mem­bers is not big, just 67, the best of the mem­bers have al­ready gained sig­nif­i­cant yields from the open­ing up of China’s gold mar­ket, said Jiao.

The agree­ment be­tween SGE and DGCE also marks a mile­stone for Shang­hai Gold to be­come a truly in­clu­sive and glob­ally-used tool in the world gold mar­ket, said an­a­lysts.

“There is a quite ob­vi­ous trend that the fo­cus of the gold mar­ket has been shift­ing from the West to the East, with in­creas­ing de­mands for in­vest­ment gold prod­ucts and in­creas­ingly ac­tive trad­ing of gold fu­tures and other de­riv­a­tives in Asia, par­tic­u­larly in China. More use of the Shang­hai Gold bench­mark glob­ally means that China has a bet­ter say in pric­ing,” said Yang Fei, an an­a­lyst with Sea won­der Pre­cious Metal In­vest­ment Co.

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