Gold Corridor From Dubai to China Sought By China

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.

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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.

“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.

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“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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