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Regal Group International: Deregulation of China’s gold market will see demand spike.
The deregulation of China’s gold market is likely to see an increase in investor demand which could see it eclipse India as the top global gold consumer.
So far, the Chinese central bank has tried to avoid the international gold market, opting instead to increase reserves from its own internal mining industry, which Regal Group International data shows is the largest in the world.
This situation however may be on the verge of major change since the People’s Bank of China in August announced that it would allow its banks to export and import more gold in a program aimed at driving the development of the nation’s gold market.
Regal Group International sources say that by opening up their market the central bank will now be able to draw vast amounts of bullion into the country, which it would then be able to pick up on the domestic market without disturbing the market balance too much.
"The way they will accumulate a massive amount of gold is by opening up imports and making sure there is heck a lot of gold swishing around in the domestic market," Mark Pervan, a senior commodities analyst at ANZ told Regal Group International sources.
"It's just too big a player in the market. Investors are looking for any signs of China buying gold on the world market. If Beijing said it was buying 100 tonnes, prices would leap, not because of this 100 tonnes, but because of the 300 tonnes the market would expect to follow."
Chinese demand for gold has dramatically increased as investors concerned over inflationary pressure look rather to alternative investment options.
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