China is planning to set up a gold investment fund, hoping to capitalize on the surging price of the metal, reported Friday's China Daily.

If successful, the fund, which is still at the proposal stage, will be the country's first gold investment fund, the newspaper said.

It was reported earlier this week that the China Gold Association (CGA) is considering setting up a fund with other partners, who include commercial banks and gold miners, citing Hou Huimin, the CGA's vice-chairman.

"The (setting up of the) fund is still in its research and study phase," Lu Wenyuan, secretary-general of the CGA, said Thursday, declining to elaborate.

"We are still in discussion with other parties on the issue and have not yet started formal work on the project," the newspaper citied Lu as saying.

The fund, which is expected to pool between 500 million yuan (US$62million) and 1 billion yuan (US$124 million), will mainly invest in gold products traded on the Shanghai Gold Exchange, while investment in domestic and overseas gold futures markets will be the next step, according to International Finance News reports.

Currently, there is no gold futures trading in China, but industry participants and experts have long called for it in order to provide a hedging tool for gold miners, processors and traders.

The introduction of the proposed gold investment fund, analysts and experts say, will provide a boost to the gold market.

"The timing (of establishing the gold fund) couldn't be better as the recent gold price surge has caught the attention of investors, both incumbent and potential ones," said Cui Lin, a gold analyst with Antaike Information Technology Development Co Ltd, a Beijing-based metal industry consultancy.

"Investors' heightened attention will make it easy for the proposed fund to attract investment," said Cui.

Source: Xinhua