Gold has been one of the best performing Commodity assets in 2023 with about 13% appreciation. Albeit during a high interest rate environment, in which gold doesn’t usually thrive, the price of the yellow metal defied the tendency and eventually reached a new record exceeding $2,100 in December. 

Several reasons are considered to have contributed to the upward price move. A series of U.S. bank failures starting in early 2023 and the collapse of a major international financial institution first set the stage for the price rally. The deterioration in the investment sentiments helped redirect capital flow to gold as a safe-haven asset.

The geopolitical conflicts in the Middle East later in the year further pushed up the price as the market priced in the increased risks and uncertainties. 

In addition, central bank purchases also supported the price of gold. China, Poland and Singapore are the major gold net purchasers in 2023.1

Chart 1: Gold price - strong performance in 2023

Amplified dynamics in China gold market

On the back of this global gold price bull run, the gold market in China showed even larger price movements.

The Shanghai gold premium, the differential between China domestic and international gold prices, exhibited unprecedented volatility in 2023. The premium also rose and stayed elevated which, in turn, led to a higher domestic price gain compared to the international gold market.

In China, investors are increasingly turning to gold due to a weaker stock market and the troubled property segment - both are traditionally popular investment options in the country. In addition to the increasing demand, the government implemented a gold import restriction midyear aiming to mitigate the yuan depreciation.

The ban was later lifted but the shot-term supply disruption combined with the heightened demand boosted the Shanghai gold premium to a record high of more than $120 in September. It has softened since the removal of the restriction, but premium continued to trade between the $25-$50 range, well above the historical level which is usually less than $10 per troy ounce.

Chart 2: Sharp rise in Shanghai gold premium and volatility

Going forward

Entering 2024, the yellow metal is expected to stay attractive to not only Chinese but global investors amid uncertainties in the growth of major economies, as well as potential Fed interest rate cut(s). The Shanghai gold premium will also continue to be an important indicator to monitor for gauging China domestic gold demand relative to the global market. The heightened volatility created both the opportunities and the needs to actively manage the price risk of the Shanghai and international gold markets.

CME Groups offers a suite of gold derivatives for price risk management. The flagship COMEX Gold futures contract presents the deepest futures liquidity pool in the world, and the Shanghai Gold futures suite allows market participants to manage price risks of the key regional China market. The Shanghai Gold (CNH) futures contract is priced in renminbi and settled against the benchmark Shanghai Gold Exchange (SGE) price. The Shanghai Gold (USD) futures also represents the SGE benchmark but settles in U.S. dollars which facilitates spread trading against international contracts priced in the same currency.

Key contract specifications of Shanghai Gold futures contracts








Shanghai Gold Exchange (SGE) Gold Benchmark PM price

Shanghai Gold Exchange (SGE) Gold Benchmark PM price


Monthly contracts listed for three consecutive months and all February, April, June, August, October, and December contracts within a 12-month period

Monthly contracts listed for three consecutive months and all February, April, June, August, October, and December contracts within a 12-month period


CME Globex; CME ClearPort

CME Globex; CME ClearPort


32.15 troy ounces

1,000 grams


U.S. dollars and cents (USD) per troy ounce

Offshore Chinese Renminbi (CNH) per gram


$0.10 per troy ounce

0.05 CNH per gram




 Source: World Gold Council

All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

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