Dubai to trade gold in yuan

The Dubai Gold and Commodities Exchange will be the first gold exchange outside of China where gold can now also be traded in yuan, according to the China Daily. Last Friday, the Dubai gold exchange and the Shanghai Gold Exchange (SGE) in Shanghai signed an agreement to offer new gold contracts in the Chinese currency.

The Dubai gold exchange is the first to also facilitate gold trading in the yuan, but if it is up to the Chinese, many more countries will follow. Earlier this month, the Shanghai Gold Exchange announced its plans to trade gold globally in yuan . In this way, the yuan not only gains more prestige as an international trading currency, but China also strengthens its influence on the pricing of gold.

The Dubai Gold and Commodities Exchange is an important hub for the global gold market, as it is used by traders in both the Middle East and India.

Gold in Chinese yuan

China is the largest producer, buyer and importer of gold in the world. Also, nowhere is there as much physical gold trading as on the Shanghai Gold Exchange. Despite this, the Gold price mainly determined by the gold market of London and New York. China wants more influence on the price formation of gold and therefore launched its own gold price fixing in yuan in April. The next step is to make gold tradable in yuan worldwide, by offering gold contracts in yuan on other major exchanges in the world.

"There is a clear trend that the focus of the gold market is shifting from West to East. As a result, demand for gold investments is increasing and gold futures and other gold derivatives are being traded more actively in Asia, particularly in China. A global increase in the use of the Chinese gold benchmark means that China can exert more influence on price discovery.", Seawonder Precious Metal Investment Co analyst Yang Fei told the China Daily.

Dubai Gold and Commodities Exchange to trade gold in yuan