BEIJING(BullionStreet): Lack of diversity and liquidity in Chinese Gold futures markets were responsible for the sudden panic in country's gold markey during the 'gold plunge', analysts said.
They said during the period which starts from April 10, when a large number of gold holders want to short the metal to hedge against a further price fall, they have a problem finding enough parties willing to take the bet.
As gold trading channels in Chinese market are relatively narrow and the pricing power of country's gold market is weaker than the more mature markets overseas, domestic gold prices are closely linked to movements in international markets with spot gold prices set during the night, Beijing time, when trading is closed.
When the Chinese market opens the next day, the deluge of sell orders can push prices down at a rate that triggers a suspension in trading. ...