Chicago Mercantile Exchange (CME) to Offer Hong Kong Gold Futures Contract

The Chicago Mercantile Exchange, the commodities exchange that recently took over the "Silver Fix" (in partnership with Thomson-Reuters), announced today that it will begin offering a gold futures contract for physical delivery in Hong Kong. The new contract is part of CME's efforts to tap into the large gold markets of Asia.

Harriet Hunnable, executive director of metal products at CME told the Wall Street Journal, "This contract will provide a precise risk management tool to the Hong Kong market. We know that there are customers who want exposure to what is happening here."

Asia accounts for 70% of the world's annual gold consumption. The WGC and Wall Street Journal have reported that physical buying of gold has "been relatively subdued" this year, but both outlets fail to take into account that according to a Reuters report earlier this year,  China has been deliberately obscuring its gold imports: 

“China has begun allowing gold imports through its capital Beijing, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves. The opening of a third import point after Shenzhen and Shanghai could also threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.”

Earlier today the Shanghai Gold Exchange announced 11 new gold contracts that would be open on its international board in the Shanghai "free-trade zone" as part of efforts to inject more foreign currency into the Chinese precious metals market. The move is part of a series of recent efforts by the country to exert more influence over global pricing of the metal.

The SGE will also offer a secure storage facility capable of housing 1,000 tonnes of gold for foreign entities to facilitate quick transactions.