China took another step toward deregulation of its gold market in late November when the Shanghai Gold Exchange opened its doors for a day of simulated trading to test its electronic trading system.
In the next few months, the Chinese gold market will be made more accessible to wholesale buyers and sellers of the precious metal, with gold futures trading on the horizon.
The Shanghai exchange represents a move away from a gold market that has been state-controlled and closely regulated by the People’s Bank of China for more than 50 years. This role has now been given to the gold exchange, which has 108 members, including banks, gold mines, refineries, jewelry makers, and gold trading companies.
China, which was recently admitted to the World Trade Organization, is moving toward a more market-oriented system, and the change is expected to allow the People’s Bank of China to discontinue buying and selling gold.
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