Daily Market Update

Gold Corridor From Dubai to China Sought By China

– Gold corridor from Dubai to China sought by Chinese Gold & Silver Exchange Society
– New Asian gold trading corridor could boost demand for 1 kg gold bars
– Should increase turnover for yuan-denominated gold coins and bars – President
– Secure supplies of physical gold from Middle East and Asia for China
– China positioning itself as leading gold trading and owning nation

by Karen Yeung in the SCMP

The Chinese Gold & Silver Exchange Society (CGSE), Hong Kong’s gold exchange, is in talks with Singapore, Myanmar and Dubai to establish a gold commodity corridor to promote yuan-denominated products under China’s Belt and Road Initiative, according to its president Haywood Cheung Tak-hay.


Joseph Chan Ho-lim, Undersecretary for Financial Services and the Treasury and Haywood Cheung Tak-hay, President of the Chinese Gold & Silver Exchange Society. Photo: Nora Tam

The gold commodity corridor could be formed by establishing an integrated infrastructure network by using Hong Kong as a base, and connect the proposed bonded warehouse in Qianhai with commercial users and precious metals traders in countries along the Belt and Road, Cheung said on Tuesday at an event to mark the exchange’s first day of trading in the Year of the Dog.

“The successful linkages of such a gold corridor could probably boost demand from users and investors for kilobar gold (1 kg),” Cheung said. “This may also increase the turnover of yuan-denominated products by two or three times.”

Cambodia was also likely to be involved in the discussions in the future, he added.

Turnover of Hong Kong’s gold market in the second half of the just concluded Year of the Rooster averaged between HK$150 billion (US$19.2 billion) and HK$180 billion per day, while averaging about 30 billion yuan (US$4.7 billion) to 40 billion yuan for yuan-denominated products, Cheung said.

Third time lucky for Hong Kong bourse as gold futures trading gets off to a glittering start

The proposed bonded warehouse in Qianhai free-trade zone, near Shenzhen, capable of storing 1,500 tonnes of gold, is expected to provide custodial and physical settlement services, and is likely to materialise in the next two to three months after receiving the verbal green light from the customs department recently, Cheung added.

Joseph Chan Ho-lim, Under Secretary for Financial Services and the Treasury, said that developing a Belt and Road gold industrial chain, and using the Greater Bay and Qianhai models can enhance Hong Kong’s status as an Asian and international hub for gold transactions.

“Although our economy is in an upward cycle, we need to solidify our advantages and open up new development areas,” Chan said.

CGSE offers Loco London gold based on the London Bullion Market Association, which is denominated in US dollars and typically around 400 ounces. But yuan-denominated kilobars, 1 kilogram gold bars, have gradually emerged in Shanghai, Qianhai and Hong Kong. So Cheung hopes a unified standard for gold kilobars can be created.

It was reported early this year that the World Gold Council was studying the possibility of creating a global standard for gold kilobars that can be deployed as collateral in futures markets and potentially encourage demand.

Hong Kong expands cross-border gold market with China, with 900 kilos of gold traded in Shenzhen

Gold, which typically is considered as a “safe haven” and has an inverse relationship with risker assets such as stocks, is likely to see increased in the second and third quarter of this year, said Cheung.

“I expect in the second half, the stock market may correct from highs on profit taking, and during that stock market volatility, gold is likely to pick up.”

He predicted that gold may rise towards the US$1,500 an ounce level if a support above US$1,300 can be formed.

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News and Commentary

Gold remains bid above key technical levels ahead of Powell testimony (FXStreet.com)

Gold prices rise for second session on softer dollar (Reuters.com)

Chicago Fed index points to stalled U.S. economic growth in January (MarketWatch.com)

U.S. new home sales drop to five-month low in January (Reuters.com)

Interest rate rise of 1% would cost average UK homeowner £930 a year (TheGuardian.com)

Snow in London: Government issues health warning as temperatures plummet (CityAM.com)


Source: Statista

Gold Nearing What Could Be An Ultra-Bullish Key Level (CNBC.com)

State of Inflationary Confusion – Mauldin (MauldinEconomics.com)

Where Corruption Is Raging Around The World (Statista.com)

Russia overtakes China in gold reserves race to end US dollar dominance (RT.com)

Warren Buffett isn’t buying. Why should anyone else? (SovereignMan.com)

Italian Elections: Brace for a bumpy ride in European stocks (CityAM.com)

Gold Prices (LBMA AM)

27 Feb: USD 1,332.75, GBP 954.78 & EUR 1,081.26 per ounce
26 Feb: USD 1,339.05, GBP 953.00 & EUR 1,085.30 per ounce
23 Feb: USD 1,328.90, GBP 951.09 & EUR 1,079.20 per ounce
22 Feb: USD 1,323.50, GBP 952.66 & EUR 1,076.40 per ounce
21 Feb: USD 1,328.60, GBP 952.87 & EUR 1,078.16 per ounce
20 Feb: USD 1,337.40, GBP 955.97 & EUR 1,083.83 per ounce

Silver Prices (LBMA)

27 Feb: USD 16.61, GBP 11.91 & EUR 13.48 per ounce
26 Feb: USD 16.67, GBP 11.88 & EUR 13.52 per ounce
23 Feb: USD 16.61, GBP 11.88 & EUR 13.50 per ounce
22 Feb: USD 16.47, GBP 11.86 & EUR 13.40 per ounce
21 Feb: USD 16.44, GBP 11.80 & EUR 13.35 per ounce
20 Feb: USD 16.57, GBP 11.85 & EUR 13.42 per ounce


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Mark O'Byrne
Executive Director

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