While the precipitous fall in global prices has touched off a gold rush among Chinese consumers, gold producers and traders are keen to offload their huge stockpiles to minimize real and potential losses.

In doing so, they face a common problem that has become increasingly pressing since the price of the metal began to nosedive on April 10. The problem is the restrictive domestic gold futures market that lacks the liquidity and diversity to absorb a sudden surge in sell orders.

When a large number of gold holders want to short the metal to hedge against a further price fall, they have a problem finding enough parties willing to take the bet.