The Shanghai Gold Exchange began trading platinum officially yesterday (August 13th), as part of the government's drive to reduce the amounts of the precious metal being smuggled.

In an attempt to stimulate activity, all transactions are exempt from the seventeen per cent value-added tax usually charged.

Trading opened at 193.95 yen per gram, and closed at 190.69, which is still higher than the global average of 186 a gram. A total of 373 kilograms was traded, more than one and a half times the quantity recorded on the trial day, the 30th of July.

Sun Changyan, a trader with jewellery firm Shanghai Lao Miao Jewellery Co Ltd, told the Shanghai Daily that yesterday's trading volume was 'relatively high since we jewellers are now in great demand of the precious metal'.

'It is the premium time to sell platinum jewellery to lovers who plan to get married in October.'

'The preferential tax policy to transact platinum in the gold exchange is one major attraction to us,' said another jewellery industry source.

At present only the China Platinum Company is allowed to import by the government, although traders are hoping that other suppliers will enter the market and help drive prices down.