LONDON (Commodity Online): Chinese demand for gold has continued to increase and may have prevented the sell-off in September from being much larger, says MF Global. China has imported increasing amounts of gold for jewelry and investment demand.
Central-bank holdings are not reported regularly, but the People’s Bank of China last announced in 2009 that it added 454 metric tons over the preceding five years. “It’s suspected that the bank is continuing to buy from domestic producers,” MF Global says.
Meanwhile, increasing disposable income among the Chinese and promotion of gold-investment products by commercial banks has boosted demand. Jewelers need inventory, and promotion of gold ownership by commercial banks has been supported by the knowledge that the government is also a buyer.
“These trends don’t seem to be likely to slow anytime soon and should keep gold prices buoyed by Chinese buyers over the next several months or years,” MF Global concludes.