Gold's Pricing Mechanism And Strategic Research On China's Gold Pricing Power

Gold is a special commodity with both monetary attribute and financial attribute. So it is complex to determine the price of gold. It is determined not only by one attribute, but also by the combined effect of a combination of all attributes. As a goods, the price of gold is determined by its supply and demand. As a money, its price is fixed by an average of production costs and profits, as well as the common purchasing power of the currency. As a financial resource, gold is valued by its performance in the comparison to other investment products.This paper analyzes the elements influencing the price of the gold from both theoretical and empirical aspects in the qualitative and quantitative research methods. It should consider the relationship between commodity supply and demand, as well as the relationship between investment supply and demand of the price of the gold. The price of gold is influenced by the international politics, economy and finance, especially the American economy. America sets the price of gold since the gold is priced in the market. When the US dollar is appreciated, the gold's price declines, vice versa.China is a big power supply and consumption, but it has little influence in the gold's pricing. China should take advantage of the financial crisis which make a heavy blow to the U.S economy and us dollar to actively seek gold pricing. It can safeguard the economic interests of China and the international status and effect of the world. At present, China has good conditions of pricing gold. First of all, China's GDP continues to grow, which lays the material basis for the gold's pricing. Secondly, there is large supply and demand of gold. Finally, China's gold futures market is open. However, it is a long-term strategic research to set the price of gold for China. The domestic gold market needs further reform and related supporting policy. China should increase the gold reserves as a safeguard and strengthen the international co-operation between the main gold markets. In order to achieve its pricing power, China should speed up the free convertibility of RMB and increase the international flow of gold.