Hong Kong’s Chinese Gold & Silver Exchange Society, a membership-based physical market, became the first market outside China to trade in renminbi-priced gold on Monday.
The century old exchange makes the move as part of an increased push by Hong Kong into investments priced in the Chinese currency as well as an attempt to cash in on the booming demand for gold on the mainland – China’s demand for gold is still increasing and jumped nearly 40 per cent up to the second quarter of 2011 compared to 2010.
The decision to launch the contract, dubbed Renminbi Kilobar Gold, was made earlier in the year and it remains to be seen whether the CGSE’s move will be as successful as the exchange hopes. Haywood Cheung, CGSE president, told Bloomberg he expected the offering to generate as much as HK$6bn ($770m) in trades a day: