Chinese bank to join lenders’ group to set global gold prices
18 Jun 2015
A Chinese bank will for the first time join the group of lenders who set global gold prices, a move that would see China move a step closer towards a bigger role in international financial markets.
Bank of China Ltd, one of China's big-four state-owned lenders, will participate in the twice-daily electronic auctions that set the LBMA Gold Price benchmark, according the London Bullion Market Association said Tuesday.
''Although ... the world's largest gold producer and consumer, China has never played a major role in the global gold fixing,'' martketwatch.com quoted Yu Sun, Bank of China's US, general manager as saying. ''Bank of China's direct participation in the gold auction would reinforce the connection between the Chinese domestic market and overseas markets.''
China vies with India as the largest consumer of gold, and the two countries between them account for over 50 per cent of global demand.
China is the world's biggest importer of the yellow metal, consuming over three times the amount of gold it produces. Demand for gold in China, was down to 273 tons in the first quarter, down 7 per cent from the year before, as economic growth cooled and bargain hunters' cautioun curbed consumer demand, the World Gold Council said.
According to commentators, China, the world's second-largest economy, was expanding its presence in gold and currency markets worldwide as the country seeks to make the yuan a viable competitor for the dollar.
An International Monetary Fund team was in China to discuss including the yuan in the IMF's Special Drawing Rights basket of reserve currencies.
''They want to be on the top table in all areas of international trade and this is no different,'' Ross Norman, chief executive officer of dealer Sharps Pixley Ltd, told Bloomberg by phone from London. ''They want to be represented in locations where benchmark prices are derived, and they have demonstrated that by signing up for the fix.''
Participation in the auction will boost the link between China and international markets, and make the price better reflect the nation's supply and demand, Yu Sun, general manager of Bank of China's London branch, said in a statement.
