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Gold Demand In China To Rise Sharply Says The WGC
Posted April 15th, 2014
TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Precious metals prices retreated across the board on Tuesday with gold dipping sharply from its three week high to $1,303.70 an ounce while silver tumbled to $19.54 an ounce. "Gold was hit by profit-taking as the rally to $1,330 on Fed minutes appeared overdone. The break below 200-day moving average and $1,300 level also triggered tons of sell-stops," said Thomas Capalbo, of Newedge.
The moment that gold broke below its 200-day MA, selling picked up sharply, but the price rebounded quickly as bargain hunters stepped in.
Meanwhile, the World Gold Council (WGC) released a report on Tuesday saying that China's demand for gold will increase around 20 percent over the next few years as the nation's populace increases its wealth.
Calling China's consumer sentiment toward gold “unwavering,” the WGC says that the nation's private sector demand for gold will soar to at least 1,350 tons by 2017. The WGC's Albert Cheng said: "The cultural affinity for gold runs deep in China and when this is combined with an increasingly affluent population and a supportive government, there is significant room for the market to grow even further."
China's citizens bought a record 1,132 tons of gold last year, which helped China to overtake India as the world's number one consumer of gold. The WGC report goes on to say that a portion of the imported bullion was being used in shadow banking commodity backed financing, “to raise low-cost funds for business investment and speculation.” A group of Chinese companies have reportedly accumulated around 1,000 tons of bullion and are using the hoard as collateral in financing deals rather than in meeting consumer demand. Copper has been used extensively in the past as collateral by Chinese investors.
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