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China's AgBank plans precious metals trading overseas
November 11, 2012 / 6:21 PM / in 5 years

China's AgBank plans precious metals trading overseas

HONG KONG (Reuters) - The Agricultural Bank of China (601288.SS) plans to launch trading of precious metals overseas in the next year or two, even though Chinese investors’ enthusiasm for the metals has cooled this year, a senior executive said.

An elderly woman pushes her twin grandchildren on a cart past a branch of Agricultural Bank of China in Xiangyang, Hubei province March 29, 2011. REUTERS/Stringer

The AgBank is one of the nine Chinese banks that have been granted a licence to import gold.

“We will start trading globally in the next year or two, most likely in London and New York,” Wang Xinyou, head of the precious metals business at the bank, told Reuters in an interview.

The bank is not considering regional trading hubs such as Hong Kong and Singapore, as its trading team in Beijing already covers the same time zone, Wang said.

AgBank competes with peers including Industrial and Commercial Bank and China (601398.SS), China Construction Bank (601939.SS), Bank of China (601988.SS) and Bank of Communications (601328.SS), among others, in attracting retail investors.

The bank sells physical gold and silver, and offers a gold accumulation plan that allows investors to contribute a small amount of money each month and take physical delivery after a period of time.

It also allows clients to trade on the Shanghai Gold Exchange via a platform, and plans to offer paper gold products later this year or early next year, said Wang.


The growth of China’s gold investment has slowed this year as investors adopted a wait-and-see attitude after prices fluctuated in a wide band, Wang said.

“The increase of new investment in gold has fallen compared to the past couple of years, because some investors, especially those who poured money in last year, got burned by volatile markets,” he said. “Chinese investors love chasing the rally, and if prices just fluctuate they are not too interested.”

If gold prices continue to hover around $1,700 (1,069.18 pounds) an ounce, investors may remain lukewarm. But if prices climb steadily above $1,800, they could be lured back, he added.

In 2011, China’s physical gold investment demand jumped nearly 40 percent on the year to 260.3 tonnes, but in the first half of 2012, investment demand only grew 6 percent on the year, World Gold Council data shows.

Spot gold closed at about $1,730 an ounce on Friday, up nearly 11 percent so far this year -- its 12th year of consecutive gains, but off this year’s high near $1,800. <GOL/>

Editing by Leslie Adler

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