A new interbank system for gold price quotes by Shanghai Gold Exchange could boost China's gold market and attract more investors to the precious metal, analysts have said.

The system, which went live on Monday, will allow approved traders from as many as 20 banks to obtain gold price quotes through the China Foreign Exchange Trading System & National Interbank Funding Center, a subsidiary of the country's central bank, according to a statement released by the exchange.

The transactions will be cleared through the exchange, according to the announcement.

This trial of interbank over-the-counter gold trading comes as a further step in the opening-up of China's gold market. The system will benefit domestic institutions' trade in large volumes of bullion and attract more individual investors to the precious metal, said Chen Xin, gold analyst with Shanghai Pudong Development Bank Co Ltd.

The trading mechanism now used by individual investors still relies on a matching system. During the trial period for the new system, banks that have been approved to operate in the interbank market will be allowed to engage in over-the-counter trading, according to the exchange.

As many as 20 banks have received approvals to test out the interbank market, including Industrial and Commercial Bank of China Ltd, China Construction Bank Corp, Bank of China Ltd, Bank of Communications Ltd, HSBC Bank (China) Co Ltd and Standard Chartered Bank (China) Ltd, the announcement said.