Thứ Tư, 25 tháng 6, 2014

Singapore Seeks Gold-Hub Role With Shanghai as Demand Shifts

Singapore will introduce a physical

gold contract this year, while Shanghai starts international

bullion trading, highlighting a push in the biggest consuming

region to establish new price benchmarks as demand shifts east.

Singapore’s kilobar contract for 25 kilograms of 99.99

percent purity may begin as soon as September, according to a

statement from Singapore Exchange Ltd. (SGX), the World Gold Council,

the government’s trade-promotion body and the Singapore Bullion

Market Association at an industry conference. The Shanghai Gold

Exchange plans to start its contract priced and settled in yuan

in the third quarter, Chairman Xu Luode told the same gathering.

Asian exchanges are developing bullion products as more of

the world’s gold is processed and consumed in the region and the

industry discusses changes to the century-old fixing benchmark

in London. Asia accounted for 63 percent of total consumption of

gold jewelry, bars and coins last year, up from 57 percent in

2010, according to the council, which plans to hold a meeting

next month on changes to the fixing. China became the world’s

largest user last year, boosting consumption as prices fell.

“The center of the world for gold consumption is Asia, so

it makes sense that the center of price discovery for the

physical market moves that way,” said Victor Thianpiriya, an

analyst at Australia New Zealand Banking Group Ltd. “It’s

only going to be positive for Asian gold demand.”

Gold for immediate delivery sank 28 percent last year,

spurring demand across the region, as prospects for global

growth and higher U.S. interest rates reduced the appeal of the

metal as a store of value. The spot price was at $1,315.98 an

ounce at 8:21 p.m. in Singapore, up 9.5 percent this year.

Metals Center

The Singapore government is promoting the city-state as a

center for precious metals after removing the 7 percent goods

and services tax on investment-grade gold, silver and platinum

in October 2012. After the change, the trade in gold in

Singapore rose 94 percent to S$35 billion ($28 billion) in 2013

from a year earlier, the groups, including IE Singapore, the

trade-promotion agency, said in today’s statement.

Shanghai is aiming to become a regional bullion-trading

hub, luring foreigners with services such as 1,500 metric ton

storage vaults and access into the world’s largest physical-gold

market, Xu said at the conference. The exchange has all the

systems ready to start the platform in the city’s free-trade

zone, including clearing and settlement, said Xu.

“We want Shanghai to be an offshore gold-trading hub after

consulting with foreign banks,” said Xu. “Bullion flowing into

those 1,500-ton vaults can be either imported into China, or en

route to be transported to other markets around this region.”

Testing Ground

China started the zone in Shanghai this year as a testing

ground for liberalizing interest rates and currency usage.

Foreigners’ access to China’s gold market will expand the range

of investment options for yuan deposits around the world, which

reached at least 1.5 trillion yuan ($241 billion) in March,

according to Standard Chartered Plc estimates as of last month.

About 30 percent to 40 percent of new bullion demand comes

from the so-called kilobar market, Ng Cheng Thye, chairman of

the Singapore Bullion Market Association, told the conference in

Singapore. The kilobar market is currently priced off the London

fixing, which is under scrutiny, said Ng.

The Singapore contract, which will have no price limits,

will trade from 8:30 a.m. to 11:25 a.m. local time, with

additional 5-minute, pre-opening and pre-closing sessions,

according to the statement. The Singapore Exchange will act as

the central clearing house, Trade Minister Lim said.

Reference Prices

“This is a timely development given the increased

requirements for reference prices to be transparent,” Lim told

the conference, which was organized by the London Bullion Market

Association. “What the bullion industry needs most is a vibrant

and robust marketplace within the heart of Asia. With our close

proximity to both demand and supply in Asia, I believe that

Singapore is well-placed to support the bullion industry.”

Metalor Technologies SA is in the final stage of getting

good-delivery certification from the London Bullion Market

Association for its new gold refinery in Singapore, Chairman

Scott Morrison said at the conference. The city-state was chosen

as the site for the plant, which will also produce silver,

because of its location between China and India, he said. The

countries are the world’s largest consumers.

The flow of bullion from west to east may last for 20

years, said Zhang Bingnan, vice chairman and general-secretary

of the China Gold Association. There are not as many investment

vehicles in the east compared with the west, so as incomes rise

bullion demand will continue, Zhang said at the conference.

Regulatory Scrutiny

Precious metals are getting more attention from regulators

after price rigging in everything from interbank lending rates

to currencies led to fines and overhauled financial benchmarks.

The U.K.’s Financial Conduct Authority in May fined Barclays Plc

after a trader sought to influence the gold fix in 2012.

A new gold mechanism or changes to the current procedure

should be based on executed trades rather than submitted quotes,

be tradeable and not just a reference price, while data should

be transparent, published and subject to audit, the producer-funded World Gold Council said last week. It will hold a meeting

on July 7 in London for the industry to discuss changes.

To contact Bloomberg News staff for this story:

Glenys Sim in Singapore at;

Jasmine Ng in Singapore at;

Feiwen Rong in Beijing at

To contact the editors responsible for this story:

Jake Lloyd-Smith at

Thomas Kutty Abraham

Singapore Seeks Gold-Hub Role With Shanghai as Demand Shifts

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