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Shanghai introduces yuan-denominated gold benchmark price

By Wu Yiyao in Shanghai (chinadaily.com.cn) Updated: 2016-04-19 14:07

Shanghai introduces yuan-denominated gold benchmark price

Shanghai Gold Exchange launched a renminbi-denominated benchmark price in Shanghai on April 19, 2016. [Photo/China Daily]

The Shanghai Gold Exchange, the world's largest physical gold exchange, launched a yuan-denominated benchmark price on Tuesday in Shanghai, a measure that will benefit both China's domestic gold market and the global precious metals market.

SGE said in a circular that the launch of the Shanghai Gold Benchmark Price will be useful as it adequately reflects the gold supply and demand in China, and represents the price trend of China's gold market.

Shanghai Gold is gold ingots with the standard weight of one kilogram and a fineness of no lower than 999.9, delivered in Shanghai, and traded via SGE price trading platform. It is quoted in yuan per gram, and settled via the SGE platform.

"At present, China's gold derivatives market is lacking in an authoritative and equitable gold benchmark price which is denominated in renminbi. The launch of Shanghai Gold Benchmark Price will facilitate the development of China's gold derivatives market which will also have a big impact on the price of gold related financial products, wealth management products and derivatives," the circular said.

Shanghai Gold Benchmark Price follows the principle which allows all orders executed on the SGE price trading platform. The benchmark price is determined when price and volume reach the balance during the auction period on the SGE price trading system.

Experts said the Shanghai Gold Benchmark Price will play a significant role in the global gold market.

According to David Marsh, Managing Director and Co-Founder of Official Monetary and Financial Institutions Forum, the yuan-denominated gold benchmark offered by SGE is a necessary addition to the international gold market and should make the pricing of physical gold more open to the play of market forces.

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