A Chinese bank will for the first time join the group of lenders that set global gold prices, which marks another step forward in China’s push for a bigger role in the 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. “Although … the world’s largest gold producer and consumer, China has never played a major role in the global gold fixing,” said Yu Sun, Bank of China’s U.K. general manager. “Bank of China’s direct participation in the gold auction would reinforce the connection between the Chinese domestic market and overseas markets.”
China is the world’s biggest importer of the yellow metal, as it consumes more than three times the amount of gold it produces. Demand for gold in China fell to 273 tons in the first quarter, down 7% from the year before, as cooling economic growth and caution among bargain hunters curbed consumer appetite, according to the World Gold Council.
The move by Bank of China to join the gold price was broadly welcomed by gold market participants, who said it would lead to more trading volumes and greater price transparency.
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(Source: The Wall Street Journal)