Money may flow into domestic gold market

13:24, May 17, 2010      

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With newly-implemented policies designed to control domestic real estate and the slump of stock market, experts theorize that a lot of money may flow into the gold market for hedging. Recently, the trading volume of domestic gold has surged.

Since the first quarter of this year, sales of domestic physical gold bullion have risen. Gold sales of China Gold in the first quarter alone exceeded 7.5 billion yuan, while total sales last year reached only 8 billon yuan.

Recently, super gold investors, who purchased physical gold bullion from a few kilograms to more than ten kilograms, also appeared in the country. One investor in Beijing even spent more than 13 million yuan on 50 kilograms of gold bars.

The data from the first quarter of this year shows domestic sales of gold bars grew several times over compared to the same period of last year, which indicates the market is getting heated, according to Li Qingfei, general manger of Shanghai Gold, China Gold Group.

Li also predicated that this current bull market in gold will heat the whole of China's gold market.

One insider said that besides reasons such as the turbulence of world financial market and skyrocketing world gold prices, the new regulation on domestic real estate, the adjustment of stock markets and the rising consumer price index figures also make gold investment hot.

Although China has the world's largest gold output and demand market, the international gold market is promoted by foreign capital. Pricing and trading centers are not located in China, so therefore the domestic gold market lacks independence. Analysts pointed that the gold prices may continue to rise and reach a record high. But it is difficult to predict, so many investors are still waiting to see.

With the popularization of knowledge about gold investment and the opening of investment channels of commercial banks, rising gold prices both home and aboard will encourage some capital flow to gold markets from the real estate and stock markets, which will make the domestic gold-trading market more active, said gold analyst Jiangshu.

He also believes international gold prices are still likely to be suppressed by the U.S. dollar and may witness major fluctuations. Domestic gold prices will also have the same trend.

By People's Daily Online


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