MARKET REVIEW OF THE SGE IN 2003

With 245 trading days in 2003, the Shanghai Gold Exchange secured 22.962 billion yuan worth of gold trading with a turnover of 235.35 ton, including 192.88 ton of Au99.95 and 42.47 ton of Au99.99. The average daily gold transaction was 960.59 kilograms, and the daily gold trading volume was 93.72 million yuan. Since its introduction on August 13, platinum traded during the 96 trading days in 2003 was 7.83 ton, valued at 1.587 billion yuan. The average daily turnover for platinum was 81.54 kilograms, and the average daily trading value was 16.54 million yuan.

Gold price kept climbing in 2003. Opening the year at 92.62 yuan per gram, the gold price reached the high and the low of 111.18 and 85.70 yuan per gram respectively before it closed the year at 111.11 yuan per gram. The weighted average price was 98.06 yuan per gram. The price for platinum also maintained an upward momentum. At the beginning of platinum trading in the SGE, the price stood at 189.90 yuan per gram. Then it came to the highest point of 234.50 yuan per gram and touched the bottom of 189.80 yuan per gram. The weighted average price for platinum was 202.79 yuan per gram.

The clearing capital in 2003 was 45.00 billion yuan, including 34.35 billion, or 76.33 per cent of members' principal business, and 10.65 billion, or 23.67 per cent of member's agent business. The deals of capital clearing and members' margins were both increasing, with a daily average of 550 and 500 million respectively. The warehouse management system fared stably for the smooth operations of saving and delivering by members.

The characteristics of the gold market were as the following. Trading scale was expanding and the market played an increasing role in allocating resources; commercial banks' enthusiasm in the market operation was further enhanced and the diversifying trend of market participants was more obvious; the market began to show its investment function and members' demand for more gold investment products was increasingly strong; the price forming mechanism in the SGE had been improved and the local price was basically the same as the international price; the prices for gold and platinum in the SGE had become the leading prices in the domestic market.

The one-year operation of the SGE showed that: the design of the exchange had satisfied the demands of market development; the system witnessed a sound performance and a stable operation, with its turnover keeping going upward; the market's basic function had been improved, thus basically achieving the expected aim of the country's reform in gold management system; the gold had been stably switched from collective buying and selling to market trading with a smooth connection between production, processing, and consumption; the SGE had obtained stage achievement and the recognition from its members.