Shanghai Gold Exchange and the World Gold Council, the market development organisation for the gold industry, yesterday agreed to co-operate on developing the market in the yellow metal.

Shanghai Gold Exchange and the World Gold Council, the market development organisation for the gold industry, yesterday agreed to co-operate on developing the market in the yellow metal, signalling how China wants to wrest a chunk of the sector from rival hubs such as in London and New York.

The organisations have signed a memorandum of understanding regarding a “Comprehensive Strategic Cooperation Agreement,” according to a statement on the WGC’s website.

“Together, these two organisations are joining hands to support the development of both domestic and international gold trading in China by leveraging the opportunity provided by the internationalisation of the Chinese gold market, through the Shanghai Free Trade Zone, to support market expansion. The agreement will support the development of gold investment products and solutions for the industry and investors both regionally and globally,” the statement continued.

Since September last year, when the Shanghai exchange created an international board, the Chinese institution has started to put the Chinese gold market on a more global footing, allowing international investors to trade precious metals via the renminbi currency and use physical gold services such as storage, trusteeship, delivery and leasing.

While spot and derivatives prices for gold and other precious metals have been traditionally denominated in dollars, the MoU and other developments can be seen as a way for China, the world’s second-largest economy, to weaken Western control of pricing and trading in the metals market. The move is also a sign of the internationalisation of the renminbi.

A statement by Xu Luode, chairman of the Shanghai Gold Exchange, released at the time of the MoU signing ceremony, noted that development of the international market in gold will “contribute to Chinese power”.

“The launch of the International Board of the Shanghai Gold Exchange marks a significant transformation, not merely by further integrating with the global market, but also by laying a solid foundation to establish a new global market structure in the gold industry,” he said. “We firmly believe that the partnership with the World Gold Council will further improve the connection between China and the global gold industry, and we are eager to develop the international market, service global clients, share business opportunities and contribute to Chinese power together with the World Gold Council,” he added.

Gold prices have, with some brief reverses, fallen from thei record high above $1,190 per ounce seen during the height of the eurozone crisis of 2011. It pushed, however, above $1,260 yesterday on the shock announcement by the Swiss National Bank that it will no longer print Swiss francs to hold the currency down against the euro.