Caledonia Mining Corporation (CMCL)

[TPX]

UPDATE 1-China to allow more firms to trade gold, may impose curbs if needed

Mar 19, 2015

* Import licences could be granted to those who meet requirements

* PBOC says will keep tight leash on gold market (Recasts with gold trade licence)

(Reuters) - China's central bank on Thursday detailed plans on granting more licences for gold imports and exports, while maintaining that it could impose trade restrictions when necessary.

A further opening up of the world's second biggest bullion market would underpin demand for the metal while also boosting global prices that have dropped 9 percent in two months.

Import licences could be granted to gold producers, refiners and financial institutions, who meet certain requirements, from April 1, the central bank said on its website on Thursday. Currently, only 15 banks can import gold into China.

In the last few years, Beijing has accelerated the pace of reforms in the gold market. It allowed foreign banks to import gold for the first time in 2013 and launched gold-backed exchange traded funds for the first time that year.

In 2014, it opened up yuan-denominated gold contracts to foreign investors on the Shanghai Gold Exchange, which launched gold options trading on a trial basis this year.

China, the world's top gold producer, is also aiming to gain more influence over prices for the metal.

The central bank, however, said it would continue to keep a tight leash on the market.

"The People's Bank of China (PBOC) can carry out restrictions of gold and gold product imports and exports in accordance with the requirements of national macroeconomic adjustments," it said on its website. (bit.ly/1DC1KWd)

It also said firms engaging in gold trade should bear the responsibility to maintain a balance in supply and demand in the domestic market, and trades need to be registered with gold exchanges approved by the State Council, China's cabinet.

The PBOC did not elaborate on any possible restrictions it could carry out or why. The central bank already has a quota system in place for gold imports, with banks needing an approval on how much they can import every year.

Questions were raised last year about over-invoicing of gold and jewellery exports that some said signalled a resurgence of speculative currency inflows. (Reporting by Shanghai newsroom and David Stanway in Beijing; Writing by A. Ananthalakshmi; Editing by Richard Pullin, Himani Sarkar and David Evans)

http://www.reuters.com/article/2015/03/19/china-gold-idUSL3N0WL2IR20150319