Gold Price Liberalization Will Not Ignite Price War

The State Development Planning Commission has recently declared to deregulate the prices over 106 commodities and services, among which gold is to be priced freely by business people starting from August 1.

The price decontrol means: 1. Domestic gold price keeps in line with that in the world market and the price of gold material will be decided by the market; 2. banks will not necessarily approve run rights for gold jewelry.

The liberalization on the gold jewelry prices will help heat up the gold consumption market and signify the market's further deregulation. Before the price deregulation, the People's Bank of China commanded the standard price and the gold stores could decide their prices within a limit.

As for price cutting by some gold stores, Beijing Guiyou Department Store, one of the stores that cut the price and once promoted gold jewelry at 78 yuan (US$9.4) per gram, said to date it resumed to 85 yuan (US$10.3) per gram only 10 days later.

As for the price cutting, experts attribute it to two reasons: the jewelry with common designs will see prices lowered but the prices of sophisticatedly designed jewelry will increase with rising costs and demand and these stores just wanted to expand sales at the cost of meager profits. In the long run, the price liberalization will help stop price cut as more stores begin to attract consumers by products, they added.

According to insiders, a national gold exchange would be an important step towards deregulating the market, and could be launched late this year in Shanghai, China's financial center.



By PD Online Staff Member Li Heng


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