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China will launch its own gold price fixing in Chinese yuan on April 19, which will be traded twice a day on the Shanghai Gold Exchange (SGE) Adopted. That means gold dealers, jewellers and gold miners and China are no longer dependent on the fixing in London.
In London, an electronic bidding system is used to determine the price of gold twice a day, but this is only done in euros, US dollars and British pounds. Chinese traders must always convert this price to their own currency, but this will no longer be necessary from 19 April. From that moment on, all 18 participants of the Shanghai Gold Exchange (SGE) will be able to bid twice a day on a standard contract of 1 kilogram of gold.
China has grown to become the largest gold market in the world in recent years. The country is not only the largest producer, it is also the largest importer and buyer of the yellow metal. It is therefore not surprising that China is launching its own gold price fixing in order to be less dependent on price formation in London.
A total of twelve banks are participating in China's new gold price fixing, including the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, Bank of China and the China Construction Bank. Jewelry chain Chow Tai Fook and mining companies such as China National Gold Corp and Shandong Gold Group are also members who will participate in the gold price fixing.
The Chinese gold price fixing is determined twice a day based on the price at which the 1 kilogram gold contract is traded. The fixing is shown as the price per gram in yuan.
The gold fixing in yuan is another step towards the internationalization of the currency. Today, all commodities are still quoted in dollars, but if it were up to China, the yuan could also be used as a unit of account in transactions. At the beginning of this year, foreign banks on the Shanghai Gold Exchange were still Pressured to participate in the fixing.
Shanghai Gold Exchange Launches Gold Price Fixing
