It’s not altogether hard to see why. As is the case for many markets, developments are best understood in hindsight. Commentators, particularly financial journalists, know that it pays to naively react to a price chart as a continuous breaking news event, rather than a complex amalgamation of shifting forces. Within those constant snap-reactions, broader themes can get missed. And when it comes to both oil and gold, a far bigger story may have just flown under the radar.
Last month, Investors Chronicle sister title Nikkei Asian Review reported that China is on the cusp of launching a crude oil futures contract priced in yuan and convertible into gold. According to the report, the futures contract will be open to “foreign companies such as investment funds, trading houses and petroleum companies”, who can sell oil in yuan, and convert the underlying contract into gold on either the Hong Kong or Shanghai exchanges.