Empirical Study On The Relationship Between China’s Gold Futures Price And Gold Price

Since the reform and opening up, China gradually lift the controls of gold market with its rapid economic development. September 1982, the domestic gold market was opening up for the sale of gold jewelry. In September of 2002, Shanghai Gold Exchange was set up. These historical events, indicating that the gold market of china has experienced decades of change, and ultimately to a fully liberalized market.In a single spot market, due to the lag of the spot price adjustment, it would easily lead to commodity supply and demand and price volatility. This inherent defects in the spot market, you need to be compensated by other mechanisms, and the price discovery function of futures market just meet this requirement. The biggest function of futures in the spot market is forming advanced price of commodity so that producers and operatprs can make more scientific decision, reduce blind investment and production, and improve the efficiency of resource allocation.The introduction of gold futures has made a great significance to further improve gold market system in our country and the price formation mechanism, after the futures releasing in the market, spot market, forward market and futures market, three markets form into the mutual promotion and coordinated development situation.As China’s gold futures market is just starting, the unit on the spot market on the futures market has not fully accepted, the futures market hedging and arbitrage are not fully functional, which hurt the institutional investors’ enthusiasm to invest in gold futures market. This means the spot market at the present stage’s active turnover and liquidity has not increased the level of liquidity of the future market, but to some extent diminished the gold futures market liquidity. Therefore, China’s gold futures market as an emerging market, it is very important to study the relationship between these two markets’ price.This article first introduced the international gold market and the current development of China’s gold market, as well as the development of international gold futures market andChina’s gold futures market conditions. and based on current situation, this article analyses the impact of the gold futures market on the gold spot market;Second, it analyses the factors that affect the gold futures price and spot price; again, the theoretical analysis, then based on theory, it also finishes empirical analysis about the spot price and the future price of the gold; Finally, based on the results of empirical analysis conducted we get the conclusion, and proposed the corresponding Policy recommendations.