MOSCOW (Sputnik) – The Bank of China’s inclusion in the ICE Benchmark Administration (IBA) London Bullion Market Association (LBMA) Gold Price this week will positively, albeit gradually, affect the Chinese gold market, experts told Sputnik on Wednesday.
"The market participants' diversification and internationalization will rationalize the gold costs. This will also promote the development of China's gold market," Beijing Gold Exchange Center chief gold analyst Zhang Lei said.
IBA approved the Bank of China's addition to the LBMA Gold Price last week.
Huang Weiping, a Renmin University of China economics professor, said that the latest news will not have an immediate impact on gold prices.
"I believe, however, that China will be able to affect the price of gold because China's gold reserves, demand for them and the share of gold production on the gray market is very large," Huang told Sputnik.
The process of purchasing precious metals in large quantities but having no impact on the price is normal in and of itself, the professor said.
When the opportunity for a non-European entity to take part in the LBMA Gold Price arose, Huang said, China and Japan were competing candidates.
"However, Japan has little foreign exchange and gold reserves. Its volume of gold purchases is far behind that of China," Huang told Sputnik.
Zhang argues Beijing will in time be able to "authoritatively set the international price of gold to Chinese and foreign businesses, jewelers and investors, becoming the world’s gold market maker."
The IBA and LBMA replaced a nearly 100-year interbank telephone conference system called the London Gold Fix on March 20.
IBA sets gold prices, in US dollars, euros and pounds, during two auctions held at 10:30 a.m. and 3:00 p.m. London time (09:30 and 14:00 GMT) daily.