Shanghai Gold Exchange and Dubai Gold and Commodities Exchange signed an agreement on Friday in Shanghai which makes the DGCX the first foreign exchange to use the SGE's renminbi-denominated gold benchmark.
The SGE is in talks with other exchanges about similar cooperation, according to an SGE circular.
SGE is the world's largest physical bullion exchange. The renminbi-denominated gold benchmark, also known as Shanghai Gold was launched in April this year. It is one of China's efforts to earn more say over pricing of the precious metal and increase its influence in the global gold market.
China is among the world's largest producers, consumers and importers of gold, and it deserves pricing power that matches its position. It should have more say in an industry long dominated by London, which sets global spot prices, said analysts.
In an industry meeting last week in Singapore, Jiao Jinpu, president of SGE, said the exchange would collaborate with various exchanges and authorities so that external exchanges will start using the Shanghai Gold benchmark as a basis for developing derivatives.
"The world is looking to the East and we are looking to the future," Jiao said.
By the end of September, SGE's international bourse has had transactions of 7,838 metric tons of gold with a combined value of 1.96 trillion yuan ($289 billion).
Although the number of SGE's current international members is not big, just 67, the best of the members have already gained significant yields from the opening up of China's gold market, said Jiao.
The agreement between SGE and DGCE also marks a milestone for Shanghai Gold to become a truly inclusive and globally-used tool in the world gold market, said analysts.
"There is a quite obvious trend that the focus of the gold market has been shifting from the West to the East, with increasing demands for investment gold products and increasingly active trading of gold futures and other derivatives in Asia, particularly in China. More use of the Shanghai Gold benchmark globally means that China has a better say in pricing," said Yang Fei, an analyst with Seawonder Precious Metal Investment Co.