China's sole
gold bourse, Shanghai Gold Exchange, announced Monday that it is
asking the central bank to be allowed to open up to foreign
traders.
"We want to
invite qualified international banks and gold firms to directly
conduct transactions in our exchange," said General Manager Wang
Zhe.
"The move
will build more channels for us to integrate with the international
gold market," Wang said yesterday at an international forum on
global gold trends, infrastructure support and market development
in Beijing.
At present
there are 128 domestic traders on the gold exchange, including
commercial banks, producers and processors. They conduct spot
transactions using Renminbi.
The exchange
was launched in late 2002, marking a substantial step towards
liberalization of the market. Previously, domestic producers had to
sell all of their gold to the central bank.
"However,
the gold exchange is closed to the international gold market
without engagement of foreign traders. Domestic gold prices don't
move fully in line with international prices," Wang said.
Integration
with the international market will pave the way for the gold
exchange to open individual gold investment businesses, he
said.
The Shanghai
branch of the Industrial and Commercial
Bank of China started to pilot individual gold investment
business at the exchange in October.
Albert
Cheng, managing director of the World Gold Council's Far East
operations, yesterday suggested regulators should permit commercial
banks to carry out gold investment business quickly to meet market
demand.
"The
construction of an over-the-counter gold trade platform at
commercial banks is an important alternative to extend the gold
trade platform," Cheng told the forum.
"For the
general public, such a trade platform is reliable and convenient,
and it can provide extended financial services. For gold producers,
this platform can put product sale and business credit together
into their own development strategy. These are advantages that are
not seen on any other platforms," he said.
The World
Gold Council predicts that demand in China will grow to over 660 US
tons annually in coming years with the opening of gold investment
businesses from around 220 US tons now.
"However,
gold investment does not mean speculating in money ... We must make
sure that we develop the gold investment market in China for the
purpose of providing the Chinese people with a safer means of
keeping the value of assets. For healthy development of China's
gold investment market, we should weaken the awareness of
speculation," Cheng said.
Paul Walker,
chief executive officer of GFMS Ltd., the London-based precious
metals consultancy, yesterday said that world gold prices are
expected to range between US$390 and US$455 per ounce during the
second half of this year.
World prices
recently reached an 18-year record high of US$455 per ounce, mainly
due to the weakening US dollar. "GFMS' base case prophesies a slump
in the dollar and surge in (gold) investment likely to continue,"
Walker said.
Trade volume
on the Shanghai Gold Exchange rose by 39.53 percent year-on-year to
284 US tons in the first 10 months of this year.
(China
Daily November 30, 2004)