Editor’s Note
This article highlights the Shanghai Gold Exchange’s milestone of becoming the world’s largest physical gold exchange, underscoring China’s growing influence in global precious metals markets.
At 2:40 PM on the 15th, inside the Shanghai Gold Exchange, employees were bustling about as the 3 PM closing time approached. The electronic board in the center of the exchange displayed fluctuating spot gold prices, keeping traders on edge. On that day alone, 24.2 tons of gold and 294.5 tons of silver were traded. Gold traded at approximately 332 yuan per gram (around 55,000 Korean won).
The Shanghai Gold Exchange is on the rise. Established in October 2002 by the central bank, the People’s Bank of China, it is a membership-based non-profit organization comprising over 160 member companies. In addition to banks, members include smelters of gold ore, and physical dealers involved in the processing, wholesale, retail, and import/export of precious metal products, reflecting its characteristics as a physical market.
Introduction of market competition system and continuous facility investment prove effective.
Korea also aims to accelerate the establishment of a spot market next year.
Currently trading gold, silver, and platinum, the exchange recorded transactions of 6,051 tons of gold, 73,615 tons of silver, and 55 tons of platinum last year, making it the largest in the world among on-exchange markets.
A major feature of China’s precious metals market is the large-scale nature of sales companies. In the Shanghai gold market, a single company typically sells pure gold, alloys, diamonds, and other colored gemstones from a 2-3 story building. Selling prices are generally determined by adding taxes, margins, and labor costs to the prices traded on the Shanghai Gold Exchange.
Among large-scale sales companies, those meeting certain qualification requirements can become members of the Shanghai Gold Exchange, allowing them to purchase at wholesale prices.
The Shanghai Gold Exchange, established less than 10 years ago, has grown into the world’s largest spot exchange with annual growth of 40%, thanks to China’s unique traditions and continuous investment in the gold market’s infrastructure.
China’s gold market has traditionally favored jewelry, and recent demand has increased due to rising gold investments by individuals and institutions. Decades of continuous facility investment and the scaling up of gold mines, centered on the northern regions with abundant gold ore deposits, resulted in China achieving the world’s top gold production and second-largest consumption last year.
The Korea Exchange (KRX), which opened a mini gold futures market last year allowing trading in 100-gram units, also aims to establish a full-fledged gold spot distribution market next year. It has currently formed a ‘Gold Market Establishment TF Team’ within the exchange and is accelerating preparation efforts.
