Gold Trading in China Deregulated Further

Central bank moves to approve more import-export licenses as gold trading leaps...

 

GOLD TRADING in and out of China is set to expand after the central bank said this week it's increasing the number of companies approved to import and export the metal.

 

Banks trading gold on the Shanghai Gold Exchange will be allowed to apply for a license. Gold miners in China – now the world's No.1 producer nation – will also be allowed to ship metal across its borders provided their annual output exceeds 10 tonnes.

 

2013 will likely see China overtake India as the world's No.1 consumer of gold. Trading metal overseas is currently restricted to just nine major banks. The People's Bank, which has long put gold trading at the heart of its long-term financial deregulation plans, said in a statement it wants to "standardize and promote the development of the gold and gold product import and export business and protect the legal rights of practitioners."

 

Deliveries of physical metal to buyers using the Shanghai Gold Exchange topped 1,000 tonnes in the first 6 months of the year, outweighing all of 2012.

 

This spring's sharp plunge in gold prices was met by a surge in demand, so strong according to logistics executives attending this week's London Bullion Market Association conference in Rome that China filled the shortfall in import demand from India caused by strict new rules aimed at reducing that country's heavy trade deficit.

 

Gold trading during Asian office hours has doubled in 2013 from 2012, said Jeremy East of Standard Chartered Bank in a presentation.

 

"If [this new relaxation] comes into effect," Reuters quotes a Hong Kong gold dealer, "supply into China could increase and [domestic] prices could ease depending on demand."

 

Premiums on physical gold, over and above the world's benchmark London pricing, jumped to $30 per ounce amid the April and June gold-price slumps, as importers struggled to meet the surge in Chinese demand.

 

Gold trading and taxation rules first began to be deregulated in China in 2002.