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SURVEYS

China Retail Gold Survey 2017: China isn’t punching its weight in gold

Its appetite for gold remains insatiable, making local market participants increasingly frustrated with their limited influence on global gold price-setting. That is set to change.

By Paolo Danese

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View survey results

The Shanghai Gold Exchange fired the first shot, opening trading of three spot contracts to international market participants in September 2014. The exchange then went live with a gold price benchmark in April 2016, with two foreign banks participating in the auction at launch.

That China is a dominant force in the global gold markets is beyond doubt: it now holds the top spot for mining, consumption and imports of the precious metal. But China’s heft is only starting to be felt outside its borders. Chinese banks have begun participating in the London market more actively, with the likes of Bank of China and Bank of Communications now contributing to the London Bullion Market Association (LBMA) price benchmark.

Industrial and Commercial Bank of China (ICBC), winner of this year’s gold survey, has taken similar steps, joining the LBMA as a market maker and becoming a gold benchmark participant for the Intercontinental Exchange. 

The bank also acquired a 2,000-tonne capacity gold vault previously affiliated with Barclays, putting it on the map as a global gold market service provider for trading, settlement and warehousing, according to Zhou Ming, general manager of the precious metals department at ICBC.