China's central bank has announced that it is taking steps to open up its gold sector by enabling more commercial banks to import and export gold.

The People's Bank of China said yesterday (August 3rd) that the move will enhance the financial markets' competitiveness while also offering more investment channels for domestic buyers.

Currently, the state-owned Bank of China, Industrial and Commercial Bank of China, Agricultural Bank and Construction Bank are able to trade gold bars, AFP reports.

It is possible qualified foreign bullion suppliers may be able to provide gold to the Shanghai Gold Exchange, as well as trade the precious metal in the Shanghai market.

Speaking to Bloomberg, Ellison Chu of Standard Bank Asia said that while China is the world's biggest gold producer, this is still not enough to meet domestic demand.

"By allowing more foreign participation and more Chinese commercial banks to import and export, China can better balance its demand and supply," the precious metals desk managing director commented.