Trading in gold using the yuan has tripled in Hong Kong this year as the currency's rally to a 19-year high helps limit risks for jewellers.
Average daily volume was 6.5 billion yuan (HK$8.2 billion) so far this year, compared with 1.8 billion yuan for the same period last year, according to the Chinese Gold & Silver Exchange Society. That exceeds the 4.9 billion yuan target set when the contracts were introduced in October 2011.
Yuan-based markets and financial services are expanding as the city seeks to cement its status as the major offshore trading hub for the currency.
The yuan touched 6.1279 per US dollar yesterday in Shanghai.
Last week, bets against gold by hedge funds and other speculators reached an unprecedented 74,432 short contracts, according to the US Commodity Futures Trading Commission.
"Yuan appreciation helps, as jewellers who receive yuan from clients become more willing to buy gold bars in the currency to minimise exchange-rate risks," Haywood Cheung Tak-hay, the president of the society, said last week.
The yuan has risen 0.6 per cent this month, the best performance in Asia, as Premier Li Keqiang signalled China will unveil a plan on capital account convertibility this year.
People's Bank of China deputy governor Yi Gang said last month the yuan's trading band would be widened "in the near future".
The central bank sets a daily reference rate for the currency, which can diverge from the fixing by up to 1 per cent.
China might double the width of the band within a year, Ma Jun, the chief economist for greater China at Deutsche Bank, said in Singapore on Wednesday.