China Has Played An Important Role In Supporting The Gold Price.

The price of gold has dropped rapidly after the rise. At present, the price of one ounce of gold is less than 1300 dollars. It is certain that the depreciation of the US dollar and the rise in gold prices are related to the implementation of different exchange rate regimes between the Bank of Japan and the Federal Reserve.

The Bank of Japan has implemented a fixed exchange rate system while the US Federal Reserve has adopted a floating exchange rate system. In recent weeks, the US dollar has fallen by several percentage points against the yen, while gold has risen nearly 60 dollars in the past 5 trading days. The exchange rate regime alone is not enough to explain these phenomena. The more important reason is that China actively participates in gold trading between Japan and the United States. China has played a role in supporting gold prices in the massive purchase of gold.

Other participants in the market (such as hedge funds, securities) Investment funds We should take a wait-and-see attitude towards this change in the gold market. If we support this change, they will focus on the Chinese gold market and take the gold price of the Shanghai gold market as a new benchmark for pricing.

Zhou Xiaochuan, governor of the people's Bank of China, once said: "the savings of the current domestic residents have reached 12 trillion yuan, providing opportunities for private investment in gold and converting monetary assets into gold assets. On the macro level, this provides more channels for savings to transform into investment, thereby playing a role in regulating the supply of money. On the micro level, allowing residents to trade and hold gold can raise social welfare level and benefit both the country and the people.

All this happened in the initial trading stage of the newly established Shanghai gold market.

The important task of the Shanghai gold exchange is to buy unprocessed gold and transport it to the world at home. More importantly, the transaction on the Shanghai gold exchange reflects China's willingness to buy gold at high prices in New York and Japan, so as to stabilize gold prices.

Before that, most analysts and traders believed that although China had a gold pricing mechanism denominated in Renminbi, its domestic trading market was still dominated by the gold market in London and New York. That is to say, although the gold exchange was established in China, there was no substantial change in the gold trade. Over the past few weeks, many discussions have been made about the pricing mechanism of gold, and the new gold trading mechanism is also popular.

Though I don't want to admit it China This behavior is a kind of government intervention, but as regards market participants' response to fixed gold prices in China from April 25th to April 27th, this really played a role of market intervention. From the recent trading situation in the London and New York markets, there was a reversal of the market.

If China uses the Shanghai gold exchange to become an important participant in the international gold market, the futures traders of the New York Mercantile Exchange or the London exchange will face the situation that the counterparties are demanding the delivery of physical gold. China's purchase of gold can also effectively prevent empty bears from shorting gold, thus keeping gold prices relatively stable.

In addition, ordinary commodities and currencies have both commodities and currencies. Dual attributes Gold has become an ideal hedge tool. Therefore, the development of inter personal gold trading market is of great significance.

Earlier, some people said that an undisclosed agreement at the G20 summit was to devalue the dollar, which is more and more likely to be true in the current situation. If this agreement is true, it will explain why the Federal Reserve has adopted a stable monetary policy in the past few weeks. The depreciation of the US dollar will also stimulate everyone's demand for gold, including private, government and company, because the United States itself is the third largest gold buyer in addition to China and India.

Worth Wray is the chief economist and world economic strategy analyst of STA management company, and is also an emerging market research expert. He said that if the agreement becomes a reality, the gold market will undergo substantial changes.

Since the major international agreements are designed to solve the common problems faced by the Member States, the international agreements reached will not change in the short term. Despite the credibility of the agreement, the fact remains that the Fed did not express any concern about its rise in the emerging gold market after its G20 summit last week. On the contrary, its attitude was mild. Since the rumor agreement was first published this week, the market has not been greatly affected by the delay.

Until now, the impact of this Agreement on the market has not been fully revealed. With the active acquisition strategy of Shanghai gold market, the precious metal trading market will enter a new era. In the past, the large demand for precious metals could not be well reflected in prices. Now, the price mechanism is better reflected in the precious metal trading.