China Links Shanghai and Hong Kong Gold Markets

Trading in Shanghai is small now, but it may not stay that way for long once China has the infrastructure in place to handle larger trading volumes.

Shanghai-Hong Kong gold link-up may offer new regional benchmark
China is set to launch a link between gold markets in Shanghai and Hong Kong this year following a landmark stock connect scheme, aiming to enhance its pricing power of gold contracts and ultimately challenge its competitors in the West.

While China is the world's largest consumer of the precious metal, having surpassed India, daily trading of gold in financial centre Shanghai is small compared with London.

The move to develop gold trading comes as more trade flows to Asia and is in line with Beijing's efforts to open up its domestic markets to foreign investors. China wants more market players to use its yuan currency when settling trade contracts and for making investments.

"We will cooperate with the Shanghai Gold Exchange and set up a link this year, making it a platform for market participants in Hong Kong to enter mainland China's gold market," Chan Sheung Chi, president of Hong Kong's Chinese Gold & Silver Exchange Society said this week.

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