The Chinese Ministry of Industry and Information Technology's plans to reform mainland China's gold sector by eliminating smaller-scale gold smelters will support international gold prices in the long run, Chinese gold industry analysts said Tuesday.
MITT said at a national gold industry meeting on Tuesday that it planned to shut down gold producers with ore processing capacities of less than 50 mt/day. The detailed timetable for implementing this was not revealed.
In Beijing, a precious metals analyst with Galaxy Futures said: "We see little impact from this move in the near term, but in the long run, it will favor a rise in the gold price."
In South China, a gold trader said: "The [MITT] move should benefit the mainland Chinese gold sector. It's good to shut the smaller producers, who have wasted resources. These smaller ones sell gold at lower prices, pushing down gold prices," he said.
Meanwhile, despite gold analysts in the West having predicted gold prices climbing to $2,000/oz by March 2012, Chinese gold industry experts said this might happen earlier than March.
In Hong Kong, a base metals trader, who switched to gold trading lately on more profit opportunities in gold said: "We expect gold prices to reach $2,000/oz by January-February next year, if the US dollar gets weaker."
The Galaxy analyst, who also has bullish views, said: "Industrial demand for gold has been stable over the past few years, and we see the same trend next year. Higher gold prices may cap gold demand growth in the jewelery sector, so we see investment demand to be the key price support factor next year," she said.
World Gold Council predicted China's gold consumption in 2012 to be just over 800 mt, up from 750 mt in 2011.
Officials from China Gold Association could not be reached for comments on the MITT move issue.
Well that's an interesting 'take' on gold price movements, we will watch with great interest.
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