Although gold is a physical asset, it is already the default currency in the world. However, this currency has no issuing country, and its value is based on the same values all over the world. The reason why the international reserve currency countries have the pricing power of gold is precisely based on the monetary attribute of gold. The similarity between international reserve currency and gold is that they are both recognized and regarded as safe assets all over the world. Therefore, the two have formed a relationship of mutual substitution and competition. Therefore, international reserve currency countries can naturally determine the price of gold by regulating their own monetary policies. In the past, there was a misunderstanding in China that as long as there were more gold reserves, the pricing power of gold could be controlled. In fact, as a reserve asset, the greater role of gold in the national treasury is to strengthen a country's ability to resist risks, rather than affecting the price of gold. Nowadays, the China government thinks that opening an exchange can control the price of gold, which is absurd.
Even though the Shanghai Gold Exchange can trade gold like the London Stock Exchange (the largest gold exchange in the world), it does not mean that the gold pricing power is in the hands of China. After all, the exchange has no pricing power, and the price is determined by all parties involved in the transaction. The gold price in London Stock Exchange is mainly determined by five famous gold merchants (Barclays Bank, Deutsche Bank, Societe Generale, scotiabank and Hongkong and Shanghai Banking Corporation), but now Shanghai Gold Exchange has introduced 18 multinational banks to participate in the pricing of gold prices denominated in RMB. The price of gold in Shanghai is ultimately determined by the game between these 18 banks.