China’s Been Hoarding Gold And It Isn’t Likely to Stop

19-Jul (Bloomberg) — With China finally coming clean that it’s been the second-biggest buyer of gold over the past six years, analysts and traders say the purchases will continue.

In the first update since 2009, the People’s Bank of China said on Friday that it owns about 1,658 metric tons, implying purchases of 100 tons a year. The stockpile may eventually reach more than 5,000 tons, according to Robin Bhar, an analyst at Societe Generale SA in London.
China’s Gold Mystery Ends

“China hasn’t been very open about its strategy, so what matters now is whether the market believes they intend to continue buying,” said Joni Teves, an analyst at UBS Group AG in London. “They do appear to leave the door open to further purchases, which should limit the downside for gold.”

…The annual gold purchases equal about 2 percent of global demand, and there’s “significant scope” for more Chinese additions, the London-based World Gold Council said Friday. The nation has been buying gold even as prices slumped from a record in 2011 to a five-year low.

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