The gold market is shifting from West to East – fabrication demand in 1989 and 2016 were roughly equal, but its regional distribution has changed markedly, with East Asia being the main destination for precious metals exports – reflecting a shift in global trade flows, explained Philip Klapwijk (Managing Director, Precious Metals Insights) at the Asia Pacific Precious Metals Conference in Singapore. He also pointed out that China’s gold bullion imports have exploded, and they now going directly to the mainland instead of via Hong Kong.

China is the world’s largest gold producer, consumer, importer, and an active gold investor, with a daily “Shanghai Benchmark” trading volume of 3.29 tonnes (2016) and 3.71 tonnes (2017, 18 May), Andrew Wang (Product Director, Shanghai Gold Exchange).

As such, how the industry continues to globalise will be depend greatly on China’s market development as the country is an enormous economic player, and the reason why despite global turbulence, David Mann (Chief Economist – Asia, Standard Chartered Bank) described Asia is the “best economic neighbourhood” to be in. He added that China and AXJC (ASEAN and India) would likely contribute to about 50-60% of global growth in 2017.

Mr Mann highlighted that gross export growth is a key input to Asian growth trackers, and that China is providing key support for most exports, though its inventory rebuild may be showing signs of peaking. Its growth in 2017 may slow down compared to 2016 on lighter monetary conditions, property cooling measures and softer domestic demand.

“New products are needed to cope with the new era in the gold industry”, Haywood Cheung (CEO, The Chinese Gold and Silver Exchange Society) said, referring to increased globalisation, digitisation, a shift from OTC to exchange trading, and a tightening grip on the market by regulators.

Ryoichi Seki (General Manager, Global Business Development Department, TOCOM) pointed out that a new contract can be complementary and not cannibalistic for an exchange. In fact, they expand the scope of the precious metals market