By By Adrian Ash
Shows New Record, People’s Bank “Looking” to Grow Reserves
THE PRICE OF GOLD and silver bounced near two-week lows in London and early New York trade on Wednesday,holding below $1340 and $25.75 per ounce respectively.
Global stock markets steadied, but Chinese equities ended sharply lower on fresh rumors of imminent interest-rate hikes, while commodity prices capped their 3-day sell-off.
The Euro fell to a new 6-week low beneath $1.35, however, as the Irish debt crisis made fresh headlines, with the Wall Street Journal reporting talks of a €100 billion bail-out, and the Irish Star tabloid accusing the government of being “gougers” encouraged by “their wanker-banker buddies”.
The gold price in Euros was volatile late Tuesday and overnight Wednesday, twice rallying fast to €32,000per kilo
As Irish debt continued to slide, Ireland’s European minister Dick Roche told the BBC that “there is no reason [for] an IMF or EU-type bailout”.
The Chinese Securities Journal meantime said the People’s Bank could again hike its key interest rates this Friday to try and quell inflation. Prime minister Wen Jiabao told state TV that Beijing is working to cap “excessive” price rises.
An “industry insider” at Tuesday’s China Mining Congress & Expo told the 21st Century Business Herald that the People’s Bank is looking to grow its gold bullion holdings further.
“Increasing gold reserves will help China increase the safety of its foreign exchange reserves,” added Peng Gang of Renmin’s Economic Reform & Development Institute to the Global Times.
“The government will choose a proper time to start the plan,” reckons Peng, “but it still depends on the market and the global gold price.”
New data released this morning by the gold-mining backed market-development group the World Gold Council showed private Chinese gold demand leaping between July and Oct. to anew quarterly record of 146 tonnes – some 14% greater than thethird quarter of 2009 and 11% greater than the record set around Chinese New Year 2010.
New Year 2011 falls on Feb. 3rd.
Chinese consumers – who have bought more gold in the last two-and-a-half years than the People’s Bank holds altogether in its reported reserves – accounted for 16% of gold bullion demand worldwide during the third quarter.
Indian households remained the No.1buyers, however, taking one ounce in every five sold globally and growing their demand faster than China year-on-year, up by 28%.
“Considering [the sharp fall] inequities in Asia and weaker base metals, precious metals did relatively well” this morning, says a Hong Kong dealer.
“While [Tokyo’s] Tocom were sellers most of the day, Chinese were bargain hunters.”
“All of the precious metals fared much better than the base complex” in Tuesday’s plunge, says today’s note from Standard Bank. But “profit-taking [still] gave way to liquidation, with the triggering of stops exacerbating the sell-off.”
Industrial metals saw “participants throwing in the towel amid a bout of mass liquidation,” Standard says.
“Copper suffered a catastrophic sell-off.”
Adrian Ash
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Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
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