Bank of China (BoC), one of nation’s big-four state-owned lenders, will participate in electronic auctions that set gold prices in the London market.
BoC will start participating in the twice-daily auctions that set the London Bullion Market Association (LBMA) Gold Price benchmark, the Wall Street Journal reported Tuesday.
“Bank of China’s direct participation in the gold auction would reinforce the connection between the Chinese domestic market and overseas markets,” the lender’s UK general manager Yu Sun was quoted as saying.
China vies with India as the largest consumer of gold, and together the two countries make up more than 50 percent of global demand. China is also the world’s biggest importer of the yellow metal.
The move by BoC to join the gold price-setting was welcomed by gold market participants, who say it will lead to more trading volumes and greater price transparency, the Journal said.
The new twice-daily electronic fixes were launched on March 20, with the Intercontinental Exchange as administrator, to make the benchmark less vulnerable to manipulation.
The old telephone-based system was dropped after regulatory investigations into benchmarks following the Libor rate-fixing scandal.
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