Author: Paul Ploumis26 Mar 2015 Last updated at 07:48:39 GMT
BEIJING (Scrap Monster): The Chinese administration has decided to allow more companies to import gold directly into the country. Starting from April 1st, domestic miners having assets overseas will be allowed to import yellow metal. Currently, only 15 banks in the country have gold import permits.
According to Albert Cheng, Managing Director at World Gold Council’s Far East office, the easing of gold import norms will boost competition. As a result, premium paid by Chinese domestic buyers on gold over international prices is likely to drop significantly. The gold buyers in the country are generally forced to pay hefty premiums as high as $10 per ounce, during extreme demand situations. However, by allowing more agencies to import the precious metal, the government intends to drive down the premiums by boosting supplies.
As per WGC estimates, at least four domestic miners are expected to apply for import licenses. However, the new rules are unlikely to result in sudden spurt in gold imports into the country. WGC anticipates 11% rise in yearly gold imports when compared with 2014. The Chinese gold imports may total around 900 metric tonnes during the year. Also, gold demand in other Asian countries such as Myanmar and Indonesia may record strong growth during the year. Over the next three years, the Asian share of world gold demand is expected to reach 65%-70% from the current levels of 60%.
Meanwhile, the Council urged China to hike its gold holdings to around 5% of its total forex reserves. It noted that the current level of 1.6% is relatively low when compared with many developed and developing countries. According to data published by Chinese Central Bank, China had raised its gold holdings in 2009 to about 1,054 tonnes. The holdings remain unchanged as of December 2014.
