China gold demand to double within 10 years

0 CommentsPrint E-mail Xinhua, March 29, 2010
Adjust font size:

China's demand for gold was set to double in tonnage terms within just 10 years, driven by growing needs for consumption and investment, the World Gold Council (WGC) said Monday in a report.

The London-based organization released its first-ever report of China's gold market, "Gold in the Year of the Tiger", in Beijing, London and New York on Monday.

Gold demand in China was likely to continue to accelerate in the long term, as buyers' appetite would keep growing despite higher gold prices, the report said.

China's demand for gold had increased an average of 13 percent per year over the past five years, making the country the world's second largest consumer market for gold after India. China has also been the world's largest gold producer since 2007.

In 2009, gold consumption in China reached 462 tonnes, which was worth more than 14 billion U.S. dollars, or 11 percent of global demand, said the WGC report.

Within the next decade, Chinese gold consumption could double from 2009 levels, it predicted.

China's growing gold consumption came from all sectors, including jewelry sales, private investment, as well as industrial and central bank demand, said Albert Cheng, managing director for the Far East office of the WGC.

"Near-term inflationary expectations and rising income levels are likely to provide further support to the local market for gold," the report stated.

Further momentum could well result from the Central Bank increasing its gold reserves.

According to the report, currently the gold held by the People's Bank of China accounted for about 1.6 percent of total reserves, which was low by international standards.

China, as the largest U.S. treasury bonds holder, may consider gold in its search for alternative investment choices with ongoing uncertainty about the future direction of the U.S. dollar, said the report.

"With total reserves of 2.4 trillion U.S. dollars, China still has the 'fire power' left in its books should the country decide to increase its gold allocation," said the report.

Yi Gang, director of the State Administration of Foreign Exchange (SAFE) and also vice governor of China's central bank, said earlier this month that China would consider "cautiously" investing more of its foreign exchange reserves in gold based on market conditions.

However, Yi said gold would never be a major investment channel for the country's huge foreign reserves.

"If China's gold demand were to continue to increase so markedly, domestic supply would be unable to keep pace, calling for more investment in gold exploration and production." said the report.

Print E-mail Bookmark and Share

Go to Forum >>0 Comments

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter