China, the world’s second-biggest gold consumer, may not find it “very necessary” to purchase bullion for its reserves after the price rose above $1,000 an ounce, a state economist said today.
The world’s total existing gold value is about $1 trillion so the liquidity of the market “isn’t that good,” Zhang Yuyan, an economist at the Chinese Academy of Social Sciences (CASS), told reporters at a Beijing forum.
CASS is a think-tank directly under the State Council and its mission is to undertake key state research projects.
India’s central bank said this week that it bought 200 metric tonnes of gold from the International Monetary Fund (IMF) last month at market prices.
Gold has reached successive records this week after the announcement and following the Federal Reserve’s pledge to keep borrowing costs low, sending the dollar lower and boosting the appeal of the metal as an alternative asset.
China can buy some gold to help diversify its resources, but it “doesn’t sound very necessary” after the price rose, Zhang said.
China has increased its gold reserves by 76 per cent since 2003, to 1,054 tonnes, the official Xinhua News Agency reported in April.
Gold for immediate delivery reached a record $1,097.72 a ounce yesterday. It last traded at $1,089.32 at 6:39 p.m. in Beijing.
The Reserve Bank of India paid an average of $1,045 an ounce for the IMF gold, according to a fund official. The $6.7 billion purchase increased its holdings to about 557.7 tonnes.
The IMF agreed in September to sell 403.3 tonnes of gold to shore up its finances and provide more low-interest loans to poor countries.
The lender said it would conduct the sales in a manner designed to avoid market disruptions.
