Shanghai Gold Exchange exceeds record volume

Gold trading on the mainland's largest physical bullion bourse is already exceeding last year's record volume as the world's biggest consumer seeks to exert its influence on the global market.

The volume of all contracts on the Shanghai Gold Exchange in the first 10 months of the year, including those in the city's free-trade zone, was 12,077 tonnes, compared with 11,614 tonnes during all of last year, according to data on the bourse's website. That may climb to 17,000 tonnes by the end of the year, the exchange's chairman, Xu Luode, said on Wednesday.

Mainland China overtook India as the world's largest gold user last year while European consumption shrank amid a global flow of gold from west to east.

While the mainland is seeking to extend its influence over the bullion market with new contracts aimed at luring international investors, trading volumes are still a fraction of those in London, where benchmark prices are determined.

"Asia more generally is becoming more important and there are going to be increasing flows in this direction," Wayne Gordon, an analyst at UBS in Singapore, said. "But at least at this stage, London's still where the trade is. The reality is that everybody still uses London values as the benchmark."

Average daily volumes for the Shanghai Gold Exchange's 99.99 per cent purity contract increased to about 20,427kg in October from 11,704kg a year earlier, according to exchange data. By comparison, an average 17.4 million troy ounces (541,200kg) changed hands daily between members of the London Bullion Market Association, according to the group's data.