China’s gold demand seen holding up as yuan declines – WGC

13-Aug (Reuters) — China’s gold demand this year is expected to at least hold steady with last year at just under 1,000 tonnes and will not likely be dented by this week’s currency devaluation, the World Gold Council (WGC) said.

Yuan-denominated gold prices in China, the world’s top consumer of the metal, spiked nearly 6 percent this week, boosted in part by investors seeking a secure store of value as their currency weakened, traders said.

“(Investors) realise the special role of gold as a hedging tool against the devaluation of the currency,” Roland Wang, managing director for WGC in China, told Reuters by phone on Thursday.

He played down the possibility that the relative rise in local prices due to the devaluation would dampen buying and result in a net drop in demand.

“I don’t think they will see this as too expensive to buy gold,” Wang said, adding that gold would also benefit as investors diversify their asset allocation after the recent tumble in equities markets.

“We still have the confidence that consumption of gold in China will remain at similar levels as last year,” he said.

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