China plans to launch yuan gold fix by end of 2015
Asian power giant China plans to launch a yuan-denominated
gold fix by the end of 2015 via the Shanghai Gold Exchange (SGE).
Its main aim is to give
the world’s biggest bullion producer and consumer more influence over pricing.
The first public confirmation made by an exchange official
comes after Reuters cited sources in February on the proposal for the fix to be
set through trading on the SGE, the world’s biggest physical bullion exchange.
China feels it is entitled to be a price-setter for bullion
and is asserting itself at a time when the global benchmark, the century-old
London fix, is under scrutiny for alleged price-manipulation.
If the yuan fix takes off, China could compel local buyers
and foreign suppliers to pay the domestic yuan price, making the London fix
less relevant in the world’s biggest bullion market.
However, given the yuan is not fully convertible, the two
benchmarks could exist side-by-side globally.
China has been making efforts to liberalise the yuan and
increase its influence in global gold markets.
The Bank of China recently joined the London gold price
benchmarking process, the first Chinese bank to do so, while the Industrial and
Commercial Bank of China Ltd said it too was keen to join the process.
These banks could also join China's yuan gold fix.
The SGE has submitted details of the fixing process, and
rules and regulations for participants, to the PBOC a few weeks ago, sources
familiar with the matter said.
The yuan fix is the most recent effort by SGE to boost
China's position in the global gold market.
The exchange opened an international bourse in September
2014, allowing foreigners to trade yuan-denominated contracts for the first
Australia and New Zealand Banking Group , Standard Chartered
and HSBC are among the members of the bourse.