China announced it plans to launch its yuan-denominated gold fix before the year ends. The exchange could rival the London fix, the world’s recognized biggest bullion market.
Reuters reports Shanghai Gold Exchange (SGE) has submitted to the People’s Bank of China (PBOC) the necessary details of the fixing process, as well as rules and regulations for participants. Unidentified sources said they are confident it will get approved “anytime now.”
Once the approval is released, Shen Gang, SGE vice president, said they target to introduce the renminbi-denominated fix “by the end of the year.” SGE said it has targeted 15 Chinese banks as initial participants, as well as foreign banks. If it does happen, the project will give China, the world’s biggest bullion producer and consumer, more power and influence over pricing of the safe haven yellow metal gold.
Local buyers and foreign suppliers interested in the fix need to pay the domestic yuan price, something that could dampen market participation. But Reuters says China’s fix “could exist side by side” with the London fix since the yuan is not fully convertible.
Shen said the yuan fix will be complementary to the century-old London gold fix.
The impending launch of the yuan-denominated gold fix is part two of China’s gold domination plan, according to portal Investor Intel. It said China is out to amass all the world’s gold deposits abroad so that it can bring down the paper U.S. dollar.
It’s appetite for the metal will not go down anytime in the near future. A report by the World Gold Council said China’s demand for 2015 alone for the precious metal may jump to 1,000 metric tons if the country’s stock market reverses its rally.