By Ese Erheriene
A Chinese bank will for the first time join the group of lenders that sets global gold prices, marking another step in China’s push for a bigger role in international financial markets.
Bank of China Ltd., /zigman2/quotes/204682472/delayed HK:3988 -1.40% /zigman2/quotes/201568493/composite BACHY -1.10% /zigman2/quotes/209359942/delayed CN:601988 -2.65% one of China’s big-four state-owned lenders, will participate in the twice-daily electronic auctions that set the LBMA Gold Price benchmark, the London Bullion Market Association said Tuesday.
“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 vies with India as the largest consumer of gold, and together the two countries make up more than 50% of global demand. 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. It will join UBS AG /zigman2/quotes/206172872/composite UBS +2.23% , Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS +4.44% , Bank of Nova Scotia /zigman2/quotes/206642548/delayed CA:BNS +2.60% , Barclays Bank PLC /zigman2/quotes/208409333/delayed UK:BARC +5.18% , HSBC Holdings PLC /zigman2/quotes/202687335/delayed HK:5 -1.89% /zigman2/quotes/203901799/delayed UK:HSBA +1.21% , Société Générale SA /zigman2/quotes/206663756/delayed FR:GLE +3.40% and J.P. Morgan Chase & Co. /zigman2/quotes/205971034/composite JPM +5.47%