The Shanghai Gold Exchange (SGE) this year will begin the practice of gold fixing, denominated in RMB, which will be an alternative to the dollar gold fixing in London. Xu Luode, chairman of the Shanghai Gold Exchange, said that the experts of the exchange had already studied the possible pros and cons of the gold fixation expressed in yuan, and by the end of the year they would launch a new price fixing system, when the conditions on the market would lay the foundation for it, .
"The renminbi-denominated gold price will not compete with the existing dollar-denominated metal price, instead it will provide an alternative, it will be another option, so both fixing in RMB and fixing expressed in dollars will cross-refer on each other, "Xu said and added that the new measurement of gold prices in yuan will make these prices more balanced.
World gold prices are determined by the system of gold fixing in London, which has been counting for a hundred years. Recently, this system is under the supervision of the authorities because of the possible manipulation of the market, but soon it will be replaced by a new system of valuing gold with a much larger number of participants. A similar step of SGE will popularize the yuan, which is the currency that is the fifth-largest in the world in terms of calculations and reserves in a number of banks.
The international board of directors of the gold exchange, which is located in Shanghai Pilot Free Trade Zone in Shanghai, has already concluded contracts for approximately 450 tons of gold bars, their amount reached 110 billion yuan, Xu said. In addition, the Chinese government has taken additional steps to liberalize the precious metals market to attract international investors and open up a market linked to the yuan. These measures also include the launch of contracts for the supply of silver for foreign traders, as well as trial trades in gold options.
"The steps taken by the Chinese government to liberalize the precious metals market will be an advantage for such markets around the world, as it will provide opportunities for choices that relate to different spheres of consumption." Whether these measures will be effective depends on the activity of the trade and the number of its participants, "said Albert Cheng, managing director of the World Gold Council (WGC) for the Far East.