China launches yuan gold fix to boost power in global gold market
Duncan Richardson, News Editor
19 Apr 2016, 12:33 p.m.
After years of planning the Chinese have launched a yuan denominated gold benchmark, as the rising superpower looks to exert greater control over the pricing mechanism for gold.
For centuries the gold price has been set twice a day in London by U.S. and London banks, but this now looks set to change.
In the last few years China has reformed its domestic gold market in a bid to become the premier center for trading bullion. China is the world’s largest producer and consumer of gold and have baulked at having to rely on a dollar pricing mechanism.
Four large state run banks along with jewellers, retailers, miners and two foreign banks will set the price twice a day. The new benchmark will take time to establish itself, but with time it may be used by the Chinese to help internationalize the use of the yuan in global trade
The London benchmark has come under increased scrutiny in recent years after Barclay's Bank was fined for manipulating the fix and extracting profits from their clients.