Shanghai enters Asia gold race

Gold ornaments sold in Suzhou, Jiangsu province. China may launch its gold exchange in Shanghai on Thursday, the first yuan-denominated gold trading board that will be open to overseas investors. WANG JIANZHONG/CHINA DAILY

City capitalizes on technical problems that delay Singapore bullion contract

China will launch its international gold exchange 11 days ahead of schedule, sources said on Tuesday, as the nation races to establish an Asian bullion benchmark at the same time as rival Singapore is forced to delay its gold contract due to technical issues.

Asia, home to the world's top two gold buyers—China and India—has been clamoring to gain pricing power over the metal and challenge the dominance of London and New York in trading.

The State-run Shanghai Gold Exchange will launch the global gold bourse in the China (Shanghai) Pilot Free Trade Zone on Thursday, two sources familiar with the matter told Reuters. The SGE had initially planned the launch for Sept 29.

The change was made based on the availability of government officials to participate in the launch event, one of the sources said, adding that all 11 physical gold contracts will begin trading on Thursday.

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A source with the SGE told China Daily on Tuesday that the exchange may launch the board on Thursday, the first yuan-denominated gold trading board that will open to overseas investors.

Another source, who holds a senior position on the SGE, said the management team was still discussing the agenda for the launch. And an unidentified source with the World Gold Council said the organization is waiting for further details on the date of the launch.

Xu Luode, head of the SGE, said last Friday at a conference in Beijing that the launch for the board would be on Sept 29.

The ability to bring forward the launch will mark the first time that foreign players are allowed to participate directly in China's physical gold market, which is the biggest in the world. The nation is hoping the exchange will become the center of Asian gold trading.

The response has been strong, with the SGE exceeding expectations in signing up trading members, Reuters reported earlier.

Singapore has delayed the launch of its gold contract to October, two other sources said. The 25-kilogram contract was set to be launched on the Singapore Exchange this month. The delay was due to technical issues in setting up the trading system, the sources said.

Officials at the Singapore Exchange and SGE were not immediately available for comment.

CME Group Inc will launch a physically deliverable contract in Hong Kong later this year, while Dubai is also preparing to launch a contract. Thailand is also considering setting up a spot gold exchange.

Separately, Hong Kong's Chinese Gold & Silver Exchange Society was given permission to set up a precious metals vault in Shenzhen, Guangdong, becoming the first exchange from outside of the Chinese mainland to be granted onshore commodity warehousing access. Bloomberg News reported.

Local government authorities and the People's Bank of China's Shenzhen branch approved the exchange's plan to build the 1,500-ton facility to store gold and silver in Qianhai, a special economic zone on the west of Shenzhen, according to Haywood Cheung, president of the CGSE. Construction will begin next year and take about 18 months, he said.

Bloomberg contributed to this story.