GOLD demand in China may sparkle as an initial batch of 20 banks participated in trading bullion via the Shanghai Gold Exchange's newly-launched interbank platform yesterday.
The banks were allowed by the Shanghai bourse, China's biggest spot gold market, to trade bullion among themselves from yesterday.
The transactions involving bilateral price inquiry are performed on the China Foreign Exchange Trade System, and cleared and settled through the gold exchange. The gold bourse charges both parties 0.04 percent of the traded amount, said a statement on its website.
One of the first banks to trade yesterday was the Bank of Communications, China's fifth-biggest lender, when it completed a spot transaction worth a principal amount of 20 million yuan (US$3.2 million) with the Industrial and Commercial Bank of China, the biggest bank in the world.
"Interbank gold trading will promote the development of the domestic gold market, and gradually form a multi-layer gold market trading system," Tu Hong, general manager of the financial markets department at BoCom, said yesterday.
"We hope the alliance between the Shanghai Gold Exchange and the China Foreign Exchange Trading Center will promote a diversified product line that covers gold forwards and swaps in the future," Tu said.
Aside from the major Chinese banks, the other participants mentioned in the bourse?s statement include four subsidiaries of foreign banks ? HSBC Bank, Standard Chartered Bank, ANZ Bank and United Overseas Bank.