Tuesday, October 29, 2013

Shanghai's Gold Has Been Trading at a Discount to London the Last Couple Days

From Reuters:
Asia Gold-Chinese prices at a discount on credit crunch fears
Chinese gold prices closed lower than global prices on Tuesday for the first time this year, traders said, as fears of a credit tightening prompted investors to sell bullion for cash.

Prices on the Shanghai Gold Exchange closed about $2 an ounce lower than international spot prices, compared with April-May premiums as high as $30.

The last time Chinese prices traded at a discount to international prices was just before Christmas last year, according to traders.

"The rise in borrowing costs in onshore China plays a crucial role. People don't want to keep the metal and they try to dump it to raise cash," said one precious metals trader in Hong Kong.

Another trader said there had not been a significant drop in demand but liquidation of stocks was taking its toll on prices. "It really is driven by money markets."

On Monday, money market rates in China reached their highest levels since June's dramatic cash crunch as some market players believed that regulators had signalled they might clamp down on excessive liquidity to get property prices and inflation under control....MORE