NEW YORK (Scrap Register): As the largest buyer of physical gold, China’s influence on global price discovery seems likely to increase, said Citi bank in a research note.

Shanghai still holds a prominent position as the largest gold futures market outside of the U.S., despite a reduction in Shanghai Futures Exchange volume for the year to date to around 450 million ounces.

By comparison, New-York based Comex gold volume has grown 15% year-on-year to around 2.1 billion ounces.

“Hence, while market participants continue to reference the LBMA 3 p.m. close and spot gold prices (both in $/oz), Shanghai prices (RMB/g) should eventually play an increasingly important role,” said analysts at Citi.

Analysts later added, “we could see London 10 a.m. prices, in particular, derive more market sentiment from China over the mid-term.”