Buying quietly, China raises gold reserves to 1,054 tonnes1 min read . Updated: 24 Apr 2009, 09:40 PM IST
Buying quietly, China raises gold reserves to 1,054 tonnes
Shanghai/Beijing: China disclosed on Friday that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying.
Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country’s reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.
Speculation has gathered speed over the last year, since the tumbling dollar has threatened to weaken China’s buying power—and give it yet more reason to diversify into gold, oil and metals.
Gold prices jumped on the news of Chinese buying and rose to $912.80 an ounce in New York early on Friday, a rise of at least 5% this week and the highest since 2 April. By a Reuters calculation, China’s holding of gold would be worth around $30.9 billion at current prices.
That accounts for only about 1.6% of China’s total foreign exchange holdings and is little more than one-tenth of the value of the US gold reserve, the world’s biggest. It also means gold has slipped as a share of China’s total reserves from about 2%, based on end-2003 prices.
Only six countries hold 1,000 tonnes or more, and China is ranked fifth, having leap-frogged Switzerland, Japan and the Netherlands with its announcement. However, the International Monetary Fund (IMF) and the SPDR Gold Trust exchange-traded fund are even bigger, leaving China with the world’s seventh biggest pot of gold.
Several gold market participants said they thought China had bought on the international market, helping to absorb hundreds of tonnes sold off by central banks and IMF in recent years.