The US and UK Join Forces to "Block" Chinese Gold, The Battle for Gold Pricing Continues to Escalate

In July, the U.S. State Department and Department of Homeland Security jointly announced the addition of 43 Chinese companies to the UFLPA Entity List, effective August 3. The gold companies named include: Shandong Gold Mining (listed on A+H shares), Shandong Gold Smelting (one of China's largest gold refining companies), and Xinjiang Jinchuan Mining (leading single capacity gold mine in Xinjiang). This is not the first time the U.S. has targeted gold companies; by January 2025, Zijin Mining and its four Xinjiang subsidiaries have been included, and this time, the naming directly targets the refining stage.

On August 5, the LBMA initiated a review process, suspending Shandong Gold Smelter's qualified delivery qualification. There was only a two-day gap between the U.S. list taking effect and the LBMA's decision. The rules do require that a review be triggered if a member is added to the sanctions list, but the decision must be completed within two days, with no independent verification and no opportunity for companies to defend themselves. In a statement on August 19, the China Gold Association criticized the LBMA for "accepting false information and suspending qualifications without sufficient fact-checking."

Is LBMA Qualification Important?

The answer is yes. LBMA qualified delivery qualification is the "passport" of the global gold wholesale market.

The list lists over a hundred refineries. As long as gold bars are labeled on this label, central banks, major banks, and major exchanges recognize them and can be freely traded worldwide. About 70% of global physical gold delivery each year is completed through the London market. Without this qualification, companies become outsiders in the international gold circulation system.

The domestic layer is even more troublesome. The Shanghai Gold Exchange also requires that gold bars be delivered by LBMA-certified companies. Currently, 22 domestic companies hold Shanghai Gold Exchange delivery qualifications, with 8 of them also holding LBMA certification. By 2025, these 8 companies will produce standard gold bars accounting for 92.4% of the total national deliveries. With LBMA qualifications suspended, these companies' gold bars not only cannot enter mainstream international markets but also partially block domestic delivery channels. The U.S. does not step in but uses LBMA as an industry organization to tacitly get global buyers to avoid Chinese gold.

The Real Intention: To Compete For Gold Pricing Power

China's weight in gold has become so significant that Washington cannot ignore it. China has ranked first in the world in gold production for 19 consecutive years and gold consumption for 12 consecutive years. The Shanghai Gold Exchange is the world's largest physical gold exchange. What truly hits the U.S. sore spot is the momentum of "Shanghai Gold" in recent years. For a long time, global gold pricing power has been held by London's LBMA and New York's COMEX, but these markets basically play "paper gold," with very few real goods available for delivery. China has taken a different path. In 2016, the Shanghai Gold Exchange launched the RMB-denominated benchmark price for "Shanghai Gold."

Against this backdrop, the logic behind the U.S. move is clear: at the juncture when global central banks collectively increase their holdings of gold, they use political means to close the door for Chinese gold to connect to the global mainstream trading system. Industry analysts point out that the wider the channel for China's gold production capacity to connect to the global mainstream trading system, the looser the Western-led pricing power and circulation rules become.

The containment by the US and UK will indeed cause short-term troubles, but the foundation of China's gold industry will not be shaken by it.

First, the domestic consumer market is large enough. In the first half of 2026, domestic raw materials will produce 152.908 tons of gold, imported raw materials 77.08 tons, totaling 229.988 tons; during the same period, gold consumption will be 511.412 tons. The 511-ton domestic demand pool is enough to absorb the vast majority of domestic gold production. Companies with suspended qualifications can sell their gold to the Shanghai Gold Exchange and domestic jewelry processing companies, completing transactions through the Hong Kong market.

Second, the central bank continues to increase holdings. By the end of July 2026, China's gold reserves reached 76.08 million ounces (about 2,366.35 tons), marking 21 consecutive months of increases. In July alone, gold reserves increased by 640,000 ounces, the largest single-month increase since gold purchases resumed in November 2024.

Third, the trading volume of the Shanghai Gold Exchange is now well-positioned to compete with the market. In the first half of 2026, the total unilateral turnover of all gold products on the Shanghai Gold Exchange will reach 16.57 trillion yuan, a year-on-year increase of 36.75%. The Shanghai Gold Exchange has officially launched its offshore delivery warehouse in Hong Kong, launching RMB-denominated offshore physical delivery contracts, completing the "RMB-Gold" closed loop of offshore physical delivery.

The US releases the list, LBMA and suspenders—this combination essentially ties the commercial certification mechanism to a single country's political tool. For a benchmark certification body covering 70% of global physical gold transactions, setting the precedent of "political list triggering commercial certification" means that any country's gold company could be stripped of global circulation rights due to its home country's geopolitical situation. The China Gold Association has already stated its position in its statement: it will collaborate with industry rights protection, strengthen compliance and self-discipline and traceability system construction, and support the Chinese government in taking necessary countermeasures.