China expected to buy more gold

PUBLISHED : Tuesday, 13 November, 2012, 12:00am
UPDATED : Tuesday, 13 November, 2012, 3:53am

China may add more gold to its reserves as the precious metal accounts for a lower share of total holdings compared with the United States, according to the London Bullion Market Association.

"When comparing China to the US, it would seem that in China, gold asset allocation can only go in one direction," chairman David Gornall told the association's conference in Hong Kong. "The country has only 2 per cent of its reserves in the form of gold compared with the US at 75 per cent."

Gold is set for a 12th annual gain, supported by central-bank buying and record holdings in exchange-traded products, as investors seek to preserve their wealth from falling currencies.

The People's Bank of China has not disclosed any changes to its gold holdings since 2009, when it said they had risen 76 per cent to 1,054 tonnes. While the US, Germany, Italy and France keep more than 70 per cent of reserves in gold, China's share is less than 2 per cent, according to World Gold Council data.

"Prices have recently been supported by official-sector buying," Gornall said.

Gold, which hit a record US$1,921.15 an ounce in September last year, was trading at about US$1,735 yesterday afternoon after rising 11 per cent this year.