New Rules to Strike Gold New Rules to Strike Gold Gold market deregulation in China is expected to boost demand for the metal once it resumes its functions as a common commodity and investment tool. Gold is used by the People's Bank of China, the central bank, as a foreign exchange reserve, but later this year a gold exchange will be launched. The need to relax controls and allow gold to play a role as a common commodity and an investment tool for individuals grows alongside China's increasing capability of earning foreign exchange. The first step towards deregulating the market should be setting up a national gold exchange, and this could be launched later this year in Shanghai, China's financial centre. More specific plans are still waiting to be approved by relevant government departments.
Jewellery currently accounts for the vast majority of gold demand in the country.
The increase would benefit from an expected move by the government to allow individuals to buy, sell and hold gold bars as an investment or saving during the second step of the market deregulation programme proposed by the gold council, he said. Cai Xiaodi, an analyst from the Beijing Gold Economic Development Research Centre, said the demand had great potential to be tapped in other areas, such as decoration and building sectors, after market deregulation. Wang said the gold's function resumption was also compounded by a predicted increase in the disposable income of the public with China's steady economic growth, to strike an annual 7 per cent in coming years. Owning gold remains a symbol of wealth for many Chinese people. He said China would become one of the key markets of the council's gold promotion campaign in the near future.