GOLD FIRMS ‘FIXED PRICES’
The National Development and Reform Commission announced penalties on Monday for gold retailers in Shanghai found guilty of manipulating prices.
Five retailers, including Shanghai-listed Shanghai Lao Feng Xiang Co Ltd, were fined 10.6 million yuan ($1.63 million) for price-fixing, said Xu Kunlin, head of the price department of the NDRC, in an interview on CCTV.
The amount equals 1 percent of their 2012 sales. Lao Feng Xiang shares rose 4.49 percent on Monday.
The Shanghai Gold & Jewellery Trade Association was also penalized for its “organization of environment and negatively affect gold’s role as a safe-haven asset.
The reverse trend in China was largely due to a spending frenzy by “Chinese aunties”, who were reported to have snapped up more than 300 tons of gold within 10 days when the price started to go down in April.
“Demand in China has great potential to improve further unified price adjustments” by gold retailers over the past six years, in violation of the anti-trust law.
The manipulation involved both gold and platinum products.
The Shanghai trade association was founded in 1996 and was under the management of the Shanghai Municipal Commission of Commerce.
Its 226 members accounted for more than 90 percent of the gold market in the city.
Its provision of the daily price range for gold was widely adopted by Shanghai bullion retailers as a guideline. because the country encourages private sector holdings,” said Zhang Wei, an analyst at Zhaojin Futures Co. Chinese gold investment demand surged from 15 metric tons in 2006 to 274 metric tons in 2012.
China was the world’s second largest user last year. Data from the World Gold Council suggested the country may overtake India to claim the top spot this year.