China challenges London Gold Fixing for gold prices

http://www.globalintergold.com/gsChina has published its intentions to launch a gold pricing system to compete with London Gold Fixing. According to Reuters, the index of gold price would be derived from 1kg gold units by Shangai Gold Exchange.

The reasons that have boosted the country to change the system has been the numerous investigations of London Gold Fixing. Recently, the Switzerland's competition commission WEKO investigated a possible manipulation of gold price by banks; besides previous investigations on other scandals.

To achieve transparency, China presented its strategy. Additionally, China is the second world's second biggest gold consumer after India, and the world's largest producer of this precious metal; two compelling reasons to aim to have a greater influence on the gold price.

“We need an index for Chinese miners and foreign suppliers in the market; the gold price index can be measured in yuans and complement London Gold Fix's dollar”- Chinese resource stated.

Their intentions to promote transparency in the market aim high, but the fact that yuan is a non-convertible currency for every market points that just Chinese enterprises are expected to participate. Notwithstanding, in case of international participation, Shangai Gold Exchange created an international unit in a free zone that allows foreigners negotiate gold contracts in yuans.

Buying gold is increasing as an alternative opportunity to secure capital due to the reliability of this precious metal.

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