Gold Price Trends

Sissi - Perspectives

Gold Rush in China

9 April 2011
After the restriction to own gold was lifted in 2004, Chinese citizens are now free to buy gold items for occasions, particularly at New Year. However, Chinese media reported buyers were still buying gold well after Chinese New Year day (Feb 3 in 2011). Every morning, queues of buyers had mushroomed at the doors of gold shops. This rush had made the shelves of most shops became bare, and some banks that sell gold bars or coins were also running low of inventories (ref: www.cntv.cn).

Some of the money could come from the hot real estate market that is under the clampdown by Beijing, but some definitely from the demand of the middleclass who worries about the inflation. Now, the continuing unrest in the Middle East and North Africa fuels the jittery of the Chinese market. In March 24, CNTV reported a short supply of raw gold as gold retailers and producers were rushing to buy larger than usual quantity of raw gold. According to the Shanghai Gold Trade Platform, the trade had growth by 30 percent, 27 thousand tons of delivered raw gold but well below the demand of 50 thousand tons.

The World Council of Gold China imported about 580 metric tonnes in 2010 and 200 tonnes for the first 2 months of 2011. Also the demands have been increasing from India, Russia, Hong Kong and some other countries such as Turkey. Furthermore, for the first time in 21 years, the central banks have reversed their trade trend to be a net gold buyer in 2010.

In April, the gold price has now risen above US$1469 and the strong demand from world market should be continued at least in the short term. The World Council Gold and the international bankers forecast the gold price might rise to US$1,500 an ounce (and maybe $2,000) in 2011.

Updates:
Probably because of the continuing weakness of US$, concerns about inflation, deficits and debts in developed nations, armed conflicts, and political instabilities,
gold price steadily rose above US$1,500 on April 20 and opened at $1,508 on April 22.
Prices: 1,438CAD, 1,404AUD, 1,035EUR, 11,722HKD (22/4/2011, 05:30).

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