China Daily (Hong Kong) - - BUSINESS -

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.

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