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December 1, 2009

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Banks offer gold-linked wealth products

BANKS in Shanghai are offering more gold-linked investment products as they ride on the latest increase in the metal's prices.

DBS Bank said yesterday it will offer a structured wealth management product linked to the performance of gold from December 7 to attract clients who are banking that the metal will maintain its rising trend.

The wealth management product, which guarantees the principal, offers a maximum return of 21 percent in 18 months if the price of gold does not double, the bank said. "The product targets those who expect wild price fluctuation but are confident that the price will still rise."

The spot gold price hit a record US$1,194 an ounce last Thursday before dropping back to as low as US$1,136.80 the next day in New York, after Dubai's debt problems sent shivers through global markets. The gold clawed back to US$1,170.40 in New York yesterday.

Gold has rallied 11 percent since India bought 200 tons of gold from the International Monetary Fund this month.

The Singapore bank is the latest to enter the fray to ride on the allure of gold as others like the Bank of China and the Bank of East Asia also offer similar gold-linked structured wealth management products in Shanghai.

The Industrial and Commercial Bank of China and the Industrial Bank offer spot gold trading on the Shanghai Gold Exchange for individuals.


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