China’s Influence is Growing on the Global Gold Market

As more investors shift to a risk-off mindset and embrace gold, China’s influence is growing on the global market for the precious metal. Acknowledging China’s increasing presence in the world gold market, the CME Group, a leading futures and derivatives exchange, is expanding its market offerings with the launch of two new gold futures products in October.

“We are extremely pleased to collaborate with SGE on these contracts that will bring market participants worldwide increased access to Chinese gold markets,” said Derek Sammann, Senior Managing Director, Global Head of Commodity and Options Products, CME Group.  “The Shanghai Gold Benchmark is widely-regarded as the Renminbi-denominated gold benchmark, and the launch of these new gold contracts, combined with our ability to offer both USD and CNH contracts utilizing EBS CNH Benchmark, will create new opportunities for clients who want to access China’s physical gold prices alongside our liquid COMEX Gold futures and options.”

China’s appetite for gold has increased, helping the precious metal to reach its highest level in six years. Per a Fox Business report, “The People’s Bank of China has added about 100 tons of gold to its reserves since December.”

For the CME Group’s product launches, the timing couldn’t be more auspicious.

“The launch of these two new Shanghai Gold futures contracts by CME Group marks a significant step in the internationalization of the Shanghai Gold Benchmark,” said Wang Zhenying, President of SGE.  “At the same time, our adoption of CME Group’s COMEX Gold Futures Asia reference prices for the settlement of SGE’s T+N contracts will provide our domestic market participants with the benefit of the world’s most recognized gold futures price as they manage their exposure to the physical gold market, so it’s a win-win cooperation between SGE and CME.”

ETF Investors Go for Gold 

Meanwhile, investors can also get in on the gold action with exchange-traded funds (ETFs). For many investors, gold is the standard in precious metal investing, which has become more accessible than ever thanks to options via an exchange-traded fund (ETF) wrapper like the SPDR Gold MiniShares (NYSEArca: GLDM).

In addition, investors can look at exchange-traded funds (ETFs) like the SPDR Gold MiniShares (NYSEArca: GLDM) and SPDR Gold Shares (NYSEArca: GLD). Adding precious metals to a portfolio certainly speaks to the diversification benefits of gold, among other things.

Leveraged exchange-traded fund (ETF) traders can look to funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT) rise. Additionally, short-term traders can also play the gold market through miners via the VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).

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