Sunday, December 30, 2007

Chinese Gold Futures Trading

China Gold Futures Trading is expected to be launched in the new year by one of China's major futures trading agencies, The Shanghai Futures Exchange (SFE)

This has been approved by The China Securities Regulatory Commission in a statement posted on its website Friday 28th Dec, 2007.

However, no date for the commencement was given.

The addition of gold futures trading on the Chinese market will add to the hedging options on what has been described as a fluctuating gold market according to some analysts.

Many financial institutions and investors work to offset risks through futures trading, especially in a volatile market and gold prices have fluctuated strongly recently.

The SFE stated earlier it would adopt strict regulations on the risk control
of gold futures after it initiated preparation work in September with
commission approval.

in 2006 China produced a record 240 tons of gold, a 7.15 growth of
percent year-on-year. In the first nine months of 2007, China produced
191.456 tons of gold, an increment of 22.175 tons, or 13.1 percent, from
the same period last year.

Most commodities, particularly gold and copper, are expected to outperform the market next year as production lags behind rising demand in the Asian countries.

United Overseas Bank Kay Hian analyst Zhang Xi wrote in a report, "We are still at the early stage of a secular bull market in the commodities sector. There is ample upside potential for all commodities, especially gold."

Growing inflationary concerns and a weakening US dollar, have prompted strong demand for gold as investors diversify their portfolios out of US dollar assets for hedging, Zhang indicated.

And Sun Hung Kai, Financial strategist with Castor Pang Wai- sun stated, "As the oil price will continue to increase next year, the gold price, as usual, will follow the uptrend, triggering large countries like China and India to have more gold reserves."

It looks all set for some strong activity in Chinese gold futures trading in 2008.

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