Gold price to shoot up if China increases reserves
China has been on a gold accumulation spree in the last few months. China’s State Administration of Foreign Exchange In April this year that the country’s gold reserves increased to 33.89 million ounces.
China used to adjust its gold reserve from 394 tons to 500 tons in 2001, then to 600 tons in 2003. The country has added another 454 tons to the gold reserve through gold purification and domestic trade.
Only six countries have reported over 1,000 tons of gold reserves across the world so far. China is ranked fifth in the world.
Early this month, India surprised the world by buying 200 tonnes of gold from the International Monetary Fund (IMF). Bullion traders are eagerly looking forward if China will step in and buy the remaining 203 tonnes of IMF gold soon.
According to independent precious metals analyst David Levenstein, if China increases its gold holding to even 5% of total reserves, a much higher gold price could ensue.
Comex near-dated gold futures closed at 1 138.60 an ounce on Monday, a new record. A break past the 1 000 mark has been sustained since October 1 on a closing price basis.
After India snapped up 200 tons of the yellow metal from the IMF, rumours began to fly that perhaps China would be the next buyer.
“China is now the largest producer and consumer of gold in the world. Yet despite the fact that they have some 2.3 trillion in reserves, only a very small portion (1.9%) is held in gold,” said Levenstein.
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