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Trading in gold investment products reached a feverish pitch in Shanghai as the price of the yellow metal yesterday shot to an 18-year high.
It reached 131 yuan (US$16.15) per gram, up around 1 percent from the price on Monday. There were many who believed the price would rise even further, traders said. Trading was hectic, helping to push the price even higher.
Early this week, it was reported, gold hit US$510 per ounce in Asia, the highest since January 1980. The price of gold in the international market topped US$500 per ounce this month, with a weekly growth rate of more than 10 percent over the last three weeks. The last time gold reached such a high price was in 1987.
The price hike has been widely attributed to higher demand due to several reasons, including unstable international politics, high energy prices and the prospect of rising inflation.
"The volume of gold traded showing great enthusiasm from both buyers and sellers," said Xu Min, the manager of the paper gold product "Huangjinbao" of Bank of China (BOC) Shanghai Branch. The price reached 133 yuan per gram yesterday, eight yuan more than the average price in November, said Xu.
"But although the price was quite high, we did not see any less interest from investors," said Xu.
The 'physical' gold trading product "Jinhangjia" jointly put out by the Industrial and Commercial Bank (ICBC) Shanghai Branch and the Shanghai Gold Exchange also saw a change in trading patterns.
The product is different from paper trading, which is not for delivery; Jinhangjia allows buyers to demand the physical delivery of gold, with expenses of only 2 yuan (24 US cents) for each kilogram.
Just 4.1 kilograms were purchased while 5.2 kilograms were sold yesterday, said Lin Yan, the product's manager. In the first three months since the product was introduced in July, the amount bought almost tripled the amount sold.
"So far the overall trading volume has been going steady, at around 10 kilograms a day," said Lin.
The price of "Jinhangjia" exceeded 130 yuan per gram yesterday, an increase of over 30 per cent over that of the previous months.
The Shanghai Gold Coin Investment Ltd (SGCI) also reported a higher amount of retrievance due to rising prices (where the buyer sells it back to the company). The retrieving price of its Chinese New Year gold bars rose close to 130 yuan per gram, up 44 per cent from the price before the gold price hike.
The price of Beijing Olympics Gold, a gold souvenir expected to be put out later this month, is set to exceed 140 yuan per gram, 5 yuan higher than the first batch of products introduced in March, said an SGCI staff member surnamed Li.
At the Shanghai Gold Exchange, the price of Au9999 (pure gold) closed at 131.99 yuan per gram yesterday, up more than 0.01 for the day. The figure was 9 per cent higher than that of a month ago, before the worldwide price hike. The exchange dismissed the rumor that the rising gold price in China was caused partially by speculative investment from overseas.
(China Daily December 7, 2005)
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