Asian market hubs move into gold

Asian Market Hubs Move Into Gold

Demand From Region Is World's Largest but Most Trading Is in West

By Biman Mukherji and Ese Erhereine
The Wall Street Journal
via EIN News, Washington
Sunday, October 12, 2014

Asians buy most of the world's gold, but nearly all of it trades in London. Now, with Western investors souring on the metal, the region is making a bid for some of the action.

Three big financial hubs in Asia are separately launching trading in a gold contract, each backed with physical gold.

If they draw enough investors, the contracts could influence the price of gold, which is set by a daily fix in London. ...

China is now the world's largest producer and consumer of gold, and the biggest importer, as domestic demand has outstripped supply. India also is a major buyer and importer. Two-thirds of global gold purchases come from Asia, the World Gold Council says.

Still, many observers say Asia is likely to find it a hard task to unseat London as the world's center for gold trading. A major reason: China bans the export of gold bullion, arguing its huge domestic production is needed to meet local demand.

That means gold can flow into China when prices there are above those set in London, but cannot move the other way. Beijing's strict controls also limit movement of capital. ...

"The greater prominence of prices out of Asia can only enhance the mix, but I doubt within the next couple of years that it will fundamentally change the way spot prices are derived," says Ross Norman, chief executive officer at Sharps Pixley, a London-based bullion broker. ...

... For the remainder of the report:

http://world.einnews.com/article/228757932/JSFuQtFN1QPMeHZ7