Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
UK EU Election Results, Brexit Party Victory, Labour and Tory Bloodbath, UKIP and ChangeUK Die - 27th May 19
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Pushes Above $900 on News of China Hoarding Gold

Commodities / Gold & Silver 2009 Apr 24, 2009 - 11:29 AM GMT

By: Adrian_Ash


THE SPOT PRICE OF physical gold bullion added a further $8 per ounce to yesterday's $13 jump in Asian trade Friday, hitting its best level in April so far on news that the Chinese government has sharply increased its Gold reserves.

Crude oil broke just above $50 per barrel, while US Treasuries slipped but UK gilts recovered from Thursday's drop.

Tokyo's Nikkei index ended the week 2.3% lower, while Tocom Gold Futures ended 2.8% better from last Friday's finish at ¥2,851 per gram.

Today's AM Gold Fix here in London was set at $909 an ounce, more than 4.2% above last Friday's finish.

Gold stood more than 5% better for UK investors, but only gained 2.9% from last week vs. the European single currency.

"China's foreign-exchange reserves have absolutely exploded in the past few years," said Jan Lambregts at Rabobank in Hong Kong to Bloomberg earlier.

"We shouldn't be surprised that they're adding a lot of all asset classes."

Hu Xiaolian, head of Beijing's State Administration of Foreign Exchange (SAFE), today told the Xinhua news agency that her country's gold hoard has risen by 75% to 1,054 tonnes since the last official statement in 2003.

That puts China at No.5 in the central-bank league of major hoarders, behind the US, Germany, France and Italy.

Overall, however, China's foreign-currency reserves have swelled five times over to $1.95 trillion, predominantly holding its wealth in US Treasury debt.

"We have strict rules on the much-debated issue of diversification," said Hu in today's interview.

"We must stick to major currencies and high-quality assets."

Even with the Gold Price trebling against both the Dollar and Yuan since end-2003, gold now accounts for just 1.6% of Beijing's total foreign exchange reserves, down from 1.9% five years ago.

"These comments indicate that China will buy more gold as reserves to improve its foreign portfolio," reckons one local asset manager. "This is a trend."

"It's not a matter of a few hundred or 1,000 tonnes," says Hou Huimin of the China Gold Association to Reuters.

"China should hold more because of its new international status, and because of the financial crisis."

"They have a long way to go," agrees Jonathan Barratt of Commodity Broking Services in Sydney, Australia.

"Look at the size of their [total] reserves. They should probably double it at least."

Now the world's No.1 Gold Mining nation thanks to the collapse in South Africa output, China is widely assumed to be building its hoard through direct purchases at local pit-0-heads.

"China has [also] been buying via government channels from South Africa, Russia and South America," reckons Ellison Chu at Standard Bank in Hong Kong.

Several analysts believe the much-touted IMF Gold Sales of 400 tonnes – re-stated at this month's G20 conference of leading economies, but not yet approved by majority shareholder the United States – would give China a fresh "off market" route to Buying Gold too.

"There is still some downside risk," cautions Manqoba Madinane at Standard Bank, "as the SPDR Gold Shares ETF realized a 49,129-oz outflow in New York yesterday, which could inhibit sentiment towards gold.

Dropping 1.5 tonnes on Thursday, backing for the world's largest Gold ETF previously jumped 325 tonnes in the first 3 months of this year, swelling to 1,104 today.

"Primary support and resistance are at $902 and $915 respectively," reckons Madinane.

Meantime on the data front today, the UK economy showed a 4.1% contraction during the first 3 months of this year compared with the start of 2008 – its worst recession since Margaret Thatcher took power in 1979.

Germany's Ifo survey of business and investment sentiment showed a better-than-expected rise for April, helping push the Euro up to new one-week highs above $1.32.

European stock markets rose sharply, meantime, unwinding this week's losses as Ford Motor Co. failed to dent US futures with news of its worst quarter in 17 years, burning $3.7 billion in cash.

By Adrian Ash

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules