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Asian Disenchantment with Western Gold Market Manipulation

The forthcoming launch of a gold kilobar contract by the CME group in Hong Kong is an element in Asian attempts to wrest control of gold benchmark pricing from the West.

by Lawrence Williams

A phrase at the end of a Reuters report on the forthcoming launch by CME Group of a gold futures contract in Hong Kong caught my eye. In commenting on the implementation of several gold futures trading options in the Asian region the report noted that “Asia is the top consumer of physical bullion in the form of jewellery, bars and coins, but there is growing disenchantment with benchmark prices set in the West, which tend to be influenced by speculators.” The new Hong Kong contract is due to go live on January 26.

That disenchantment note is perhaps understating the case. There has to be little doubt that speculative elements are indeed manipulating the gold price on COMEX using the paper gold futures markets to do so. It is hard to see any other reason behind some of the strange pricing moves involving enormous trades often at very thin trading times.

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