Bank of China joins London gold benchmark

16-Jun (Financial Times) — A Chinese bank will join London’s gold fix for the first time, giving the world’s biggest consumer of the precious metal a greater say in the setting of its price.

State-owned Bank of China’s participation in the twice daily auction, which gold miners and consumers use as a benchmark, will allow the international price to better reflect supply and demand in China, the bank said.

“Although being the world’s largest gold producer and consumer, China has never played a major role in the global gold fixing,” Yu Sun, general manager of Bank of China’s London branch said.

While Bank of China has participated in the London gold market for decades, the fix has been run by western banks since it started in 1919, and used to take place on the premises of NM Rothschild.

Adding a Chinese bank reflects the shift in gold demand to Asia. It is jewellery demand from China and India that now influences the price direction of gold rather than money from financial investors, HSBC said in a report today.

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