Friday, 16th March 2007 (3655 views)

The Bank of China has announced that it will be setting up a gold trading option for individual investors to negate the impact of price fluctuations in the gold market.

According to the Xinhua news agency, the bank is the first commercial outfit to offers such a service, with the trading option also having been rolled out in other provinces of China, including Nanjing, Suzhou, Wuxi and Nantong in Jiangsu.

With gold trading options enabling an investor to buy or sell gold at a fixed price at a specified date in the future, Wang Ruilei, a senior analyst with Chengdu Gaosaier Gold & Silver, said that with the Shanghai Gold Exchange only providing spot gold trades, "investors risk losses from severe price fluctuations".

He explained that the Bank of China's gold options trade could act as an "investment tool to reduce risk", reports Resource Investor.

Mr Ruilei also explained how the internal price of gold could be used as a basis for the gold tradings option.

 

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