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China Gold Demand May Double Within Decade, WGC Says

March 29 Bloomberg — Gold consumption in China may double within the next 10 years, boosting prices as supplies fail to keep pace with booming demand from investors and the jewelry industry, the World Gold Council said.

“China has an insatiable appetite for gold, which looks likely to continue in an environment where domestic mine supply lags behind demand,” the council said in a report today. China’s economy grew 10.7 percent in the fourth quarter from a year earlier, the fastest pace in two years, after a 4 trillion yuan $586 billion stimulus package spurred record lending and consumption.  The world’s biggest gold producer has increased reserves by 76 percent to 1,054 metric tons since 2003 and has the fifth-biggest holdings by country, Hu Xiaolian, deputy governor of the People’s Bank of China, said in April.

“An uptick in China purchases could bring an impetus back to the gold market,” said Hwang Il Doo, Seoul-based senior trader with KEB Futures Co, by phone today. “Given China’s currency reserves and rising wealth, the impact from their buying on prices will be powerful, although it may take time.”

Bullion prices have gained 21 percent in the past year as the global recession spurred demand for haven assets and the dollar weakened 5 percent against six major currencies. Gold for immediate delivery was little changed at $1,106.80 an ounce at 1:50 p.m. in Singapore.

“On the investment side, we see exponential growth,” Albert Cheng, the council’s managing director for the Far East, said in an interview in Beijing.

via China Gold Demand May Double Within Decade, WGC Says Update2 – BusinessWeek.

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