Traders and banks have moved to take advantage of the price gap, buying cheaper gold on the spot market and delivering it to the exchange’s warehouse. From there, it can be used to offset sales of futures, allowing them to close positions at a profit.
Bullion held in warehouses linked to the Shanghai Futures Exchange has jumped to an all-time high, another sign of resilient demand for gold investments in China.
More than 36 tonnes of gold bars have been registered for delivery against futures contracts, a quantity that has almost doubled over the past month. The build-up in stockpiles reflects a surge in arbitrage activity triggered by heavy demand for futures, which are trading at a large premium to the physical metal.
