China may boost gold reserves amid asset imbalances

China may join other emerging-market economies in boosting gold reserves as the precious metal makes up a smaller share of the country's foreign-exchange holdings compared with developed nations, a London-based researcher said.

The central government has not announced any changes to state gold reserves since authorities in 2009 said holdings totalled 1,054.1 tonnes. While China holds the world's biggest foreign-exchange reserves, bullion accounts for 1.1 per cent of the total, compared with about 70 per cent for the United States and Germany, the biggest gold holders, World Gold Council data shows.

"It is clear that Western central banks over time will be reducing their reserves and China and other Asian countries will be increasing," David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in Beijing. "Gold will become more traded among central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves."

Central banks, net buyers of gold for 14 straight quarters, helped limit bullion's losses last year that were the most since 1981 and may increase purchases to as much as 500 tonnes this year after adding 409 tonnes last year, the London-based council said last month. The precious metal rose 3 per cent this year as geopolitical tensions boosted demand for a haven.

Bullion for immediate delivery climbed 0.3 per cent to US$1,237.04 in Beijing trading yesterday. The metal fell 28 per cent last year, the biggest annual decline in more than three decades, and is down 36 per cent from a record US$1,921.17 reached on September 6, 2011.

Russia is among nations that added gold to reserves this year, boosting holdings to the highest in at least two decades and surpassing China's hoard to become the fifth-largest by country, data from the gold council shows.