A steady hand to keep gold market on the straight and narrow

It was rumoured that there was speculative actions from local gold trading firms leading to divergent domestic and world market gold prices which could only be addressed with a State Bank intervention. Is that true?

That is incorrect. Gold traders themselves could not forecast such a hot rise in the gold price. The gold price continually broke records, making people rush into hoarding gold. Demand outran the supply. Gold trading firms only have sufficient amounts to service the retail system. For wholesale trading, they must be cautious since it would be hard to balance gold sources once they sold out their gold stock.

Is that true that firms earlier exported gold jewelry at lower prices then later imported gold when prices already stayed high, leading to higher gold prices in the domestic market than in the world market?

When the world gold price stays higher than that in local market and firms have big stock they will seek to export gold to reap profits. In fact, big gold volumes are kept in the community.

Nonetheless, amid a feverish gold market and when gold prices rose due to uncertain US economy and pervading Euro zone public debt, gold keepers held onto their stock despite high gold prices.

Does it mean that local bullion market will become stable when gold import-exports are handled in a wise manner?

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That is right. The State Bank message helped stabilise people’s mindset as well the bullion price. Gold firms are braver in their selling decisions as they believe they can import gold later using central bank quotas. There will be a harmony in domestic and world market gold prices when local bullion market has a balance in the supply and the demand.

Gold import-exports are important for bullion market stability and curbing price manipulation. The State Bank plays a vital role in this.

What is the bullion market’s future development and it is risky buying gold at current high prices?

The gold price trading band is loosened to $50-$80 per once within the past few days, the trading band was just $20-$30 per once previously. Gold price development in the near term is not clearly visible on a technical analytical graph. However, gold price’s upward trend still shows no sign of ending despite a recent strong downward revision.