BEIJING(Commodity Online): Chinese Gold and Silver Exchange(CGSE) in Hong Kong has initiated trading in yuan-denominated gold contracts on Monday, hoping to boost the exchange's trade volumes and to facilitate internationalization of yuan, reported Platts.
"Once our Kilobar gold trade has become mature, we'd like to start silver bar trade, which we expect to materilize about six months from now," Platts quoted the CGSE source as saying.
The development has ushered in interest in analysts like Bitupen Majumdar, currency-commodity analyst with JRG Securities, India, who thinks that the move is a baby step for the exchange in the direction to ultimately rival the COMEX in New York.
COMEX is currently the benchmark for precious metal prices.
“Though I cannot peg a time-frame to the same--the day when the said exchange would become a benchmark in global precious metals prices.” he hastily added.
Platts report added the exchange expects newly launched Renminbi Kilobar Gold contracts' trade volume to account for 5-10% of CGSE's total gold trade volume to around 30% by mid-2012. That is about clocking Yuan 300 million ($47 million) in the coming months.
However, “Yuan denominated gold trade may not create any ripples in the currency market.” Chowda Redddy added.
Of course, the overseas investors are also eligible to tap into the Yuan denominated gold for the MNCs (Multi National Companies) as well as FIIs (Foreign Institutional Investors).
