Bloomberg Beijing
CHINA’S central bank circulated a draft plan to ease restrictions on gold imports, people with knowledge of the matter said, in a move that might lead to lower prices in the biggest market for bullion.
The People’s Bank of China (PBoC) drafted a plan that would open up gold imports to qualified miners, as well as all the banks that were members of the Shanghai Gold Exchange, according to the people, who asked not to be identified because the proposal had not been made public. China Gold Coin, a maker of commemorative gold and silver coins, could also qualify to import bullion, they said.
Chinese regulators are pushing to open up the country’s gold trade and lure foreign investors as part of its broader effort to link the mainland to global markets. The country began offering international institutions access to yuan-denominated gold contracts in Shanghai’s free-trade zone in September, a move that may extend its influence over prices while boosting the role of its currency in global trade.
The move may further cut the premium Chinese buyers pay for gold. That spread has averaged $2.74 (R30.57) an ounce so far this year, down from an average premium of $18.75 last year, according to calculations of the difference between benchmark prices in London and contracts traded on the Shanghai Gold Exchange.
“More importers will level the playing field,” Liu Xu, an independent gold analyst, said. While the move might not lead to more imports, eased restrictions could “erode the premium and benefit Chinese consumers who buy gold”.
At the same time, China’s move may spur higher global prices following eased import restrictions in India, the second-biggest market, where the central bank last week unexpectedly removed rules requiring importers to sell 20 percent of their shipments to jewellers for re-export. Two days later, Swiss voters struck down a proposal to force the central bank to hold at least 20 percent of its assets in bullion.
The PBoC did not respond to a faxed request for comment yesterday. Phone calls to the Shanghai Gold Exchange went unanswered.
Gold for immediate delivery fell as much as 0.4 percent to $1 204.69 an ounce in Singapore, according to Bloomberg generic pricing. Prices reached $1 221.43 on Monday.
Under the draft, importing licences would be restricted to miners with a minimum $30 million of overseas investments and gold mine concessions as well as 200 million yuan (R364m) of registered capital and 10 tons of annual mined gold output, the people said.
The changes would “encourage local miners to explore opportunities overseas”, said Wallace Ng, a Shanghai-based trader at Gemsha Metals. He said refiners might also benefit.
Gold purchases in China tumbled 37 percent to 182.7 tons in the three months to September, the World Gold Council said on November 13.