China to launch physical gold exchange

Gas flowing between Russia & Ukraine after election

The Gas Will Flow?

Oil prices are looking tired as it appears Russia and Ukraine may have a deal that will keep the gas flowing. This comes despite ongoing fighting after the Ukraine election gave Russian President Putin a serious setback. Pro-European and candy maker Petro Poroshenko got 53% of the vote Sunday to be their next president during the Sunday election. Word that Russia and Ukraine may be close to a deal that will pay Russia $2 billion dollars this week and a half a billion next is giving hope that tension may ratchet down and the feared disruption of supply may not come to pass. In the meantime a slew of option expirations in oil products as well as natural gas and metals may provide the volatility that has been recently lacking.

Still the fighting is keeping enough unease in the market place. The New York Times reports that it appears that they have removed rebels from the airport in the east. “The new Ukrainian government struck the separatists in this eastern province with a major military offensive on Monday, battling them over an important provincial airport in ground fighting that lasted for hours. The rebels were left scattered and shaken, just one day after a successful national election they had tried to disrupt.”

Russia’s Foreign Minister, according to Dow Jones, is demanding that Ukraine stop using military force on civilians. So the tensions have not completely gone away. Gold is sliding to a two week low as the market seems content with the status quo in Ukraine. Yet tensions between Vietnam and China are heating up after China sunk a Vietnamese fishing vessel. India’s government is looking to lift gold import restrictions but not fast enough to inspire a rally on light summer volume. China is launching a global gold exchange.

Reuters reports that China has approached foreign banks and gold producers to participate in a global gold exchange in Shanghai, people familiar with the matter said, as the world's top producer and importer of the metal seeks greater influence over pricing. The Shanghai Gold Exchange (SGE) got the go ahead from the central bank last week to launch a global trading platform in the city's pilot free trade zone, a move that could challenge the dominance of New York and London in gold trade and pricing. Beijing's plans to open up gold trading comes at a time when the benchmark price-setting process for precious metals is under scrutiny. Barclays Plc became the first bank to be fined over attempted manipulation of the 95-year-old benchmark London gold market daily "fix" last week.

State-backed SGE has asked bullion banks such as HSBC, Australia and New Zealand Banking Group, Standard Bank, Standard Chartered and Bank of Nova Scotia to take part in the global trading platform, two people approached by the exchange said.

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