China's move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong.
"The rules of the global oil game may begin to change enormously," said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT.

?The Shanghai International Energy Exchange has started to train potential users and is carrying out systems tests following substantial preparations in June and July. This will be China's first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies.

And 

The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. "It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either," Macleod said.

Eoin Treacy's view

This is an interesting gambit from China because while it is the biggest importer of oil it is the largest producer of gold. The futures contract is not yet active but for oil producers who are not happy to transact in Dollars, physical gold has definite attractions. It also raises the stakes in China’s attempts to establish the Renminbi as a viable reserve country. 

To succeed China would have to be prepared to run deficits and to flood the international economy with currency to fuel a consumption boom at home. No Asian country, Japan included, has yet achieved the USA’s consumption on a sustained basis although Hong Kong comes close. 

However, there is an additional element to the argument. The vast majority of China’s debt is both denominated in Renminbi and held internally. Meanwhile Chinese citizens have been using every opportunity to acquire assets overseas.  Everyone is aware of the mountain of debt accumulated by China’s regional governments over the last 30 years as well as the size of the shadow banking sector. China is both aiming to liberalise access to its financial markets and burnishing the appeal of the renminbi as a reserve currency. That reflects the government’s desire to diversify ownership of debt beyond its borders, which would increase capital available while also ensuring its debt also becomes someone else’s problem. 

Gold continues to unwind its short-term overbought condition, having encountered resistance in the region of the 2016 peak. A short-term oversold condition is now developing as it approaches the region of the trend mean but a clear upward dynamic will be required to question the current downward bias.