Here’s an interesting gold story – China’s taking steps to open up its gold market. Bloomberg reports:
China will let more banks import and export gold and open trading further to foreign companies as near-record prices and falling stock markets spur demand in the world’s second-largest buyer of the metal. Gold prices gained.
China may “increase foreign members on the Shanghai Gold Exchange and will also study ways to allow foreign qualified bullion suppliers to deliver to the exchange,” the People’s Bank of China said today. Banks may also be allowed to hedge onshore gold positions overseas to encourage the development of yuan-denominated derivatives trading, it said.
Gold demand in China, the world’s largest producer, gained in the first half as government measures to cool the property market and falling equities spurred investment, the Shanghai Gold Exchange said July 7. Gold climbed to a record in June as investors sought to protect their wealth amid concerns about the global economic recovery, and is headed for a 10th consecutive annual increase.
The latest steps “are extremely encouraging and seem certain to lead to increased gold demand in a country that has recently been contending with India for position of the largest consumer of gold in the world,” said George Milling-Stanley, the New York-based managing director of government affairs at the producer-funded World Gold Council.
With Quantitative Easing back in play, it will be interesting to see if Chinese demand for gold gives it some additional legs. Or, will broader deflationary forces continue to keep a lid on gold prices as credit is destroyed at a faster rate than the government creates it?
Source: StockCharts.com
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