Gold-investment demand in China may gain more than 10
percent this year as buyers seek a haven from Europe’s debt crisis and the
prospect of weakening currencies, according to the country’s largest bullion
bank.
“Investors here want to hold part of their assets in gold to
hedge for the risks, especially now that the financial crisis has evolved into
a sovereign crisis,” Zheng Zhiguang, general manager of the precious-metals
department at Industrial and Commercial Bank of China Ltd., said in an interview in Shanghai.
China will topple India this year as the largest bullion
market as rising incomes bolster demand, the World Gold Council forecasts.
Photographer: Jerome Favre/Bloomberg
June 4 (Bloomberg) -- Juerg Kiener, chief investment officer
at Swiss Asia Capital Ltd. in Singapore, talks about the outlook for commodity
markets. Gold declined after rising the most in more than three years as some
investors sold the metal to raise cash following losses in equities and other
commodities. Kiener speaks with Rishaad Salamat on Bloomberg Television's
"On the Move Asia." (Source: Bloomberg)
May 31 (Bloomberg) -- Dominic Schnider, Singapore-based
global head of commodity research at UBS AG's wealth
management unit, talks about the outlook for gold prices and demand. Schnider
speaks with Zeb Eckert on Bloomberg Television's "On the Move Asia."
(Source: Bloomberg)
May 28 (Bloomberg) -- Norman Chan, head of investment at
Calibre Asset Management Ltd. in Hong Kong, talks about global financial
markets and his investment strategy. He also discusses
Europe's sovereign debt crisis and China's economy. He speaks with John Dawson
on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)
China will topple India this year as the
largest bullion market as rising incomes bolster demand, the World Gold Council
forecasts. Gold may gain for a 12th year in 2012 as European policy makers
strive to avoid a breakup of the euro zone and the U.S.
Federal Reserve weighs more stimulus to aid the recovery. Investors in China,
facing lackluster equity markets and property curbs, are looking more to the
metal, Zheng said June 6.
“It’s necessary for individual, institutional or even
government investors to hold gold when the value of money is decreasing at a
time of possible quantitative easing or excessive money-printing practices,”
said Zheng.
Investment demand in China was a record 98.6 metric tons in
the first quarter, 13 percent higher the same period in 2011, according to
figures from the producer-funded council. Last year, it climbed 38 percent to
258.9 tons compared with 2010, as overall demand gained 20 percent to 769.8
tons. China’s total gold demand may reach 1,000 tons this year, the WGC has
said.
Debt Crisis
Gold for immediate delivery traded at $1,598.02 an ounce at
4:03 p.m. in Shanghai,
2.2 percent higher this year. The price touched $1,526.97 on May 16, the lowest
level since December, as Europe’s debt crisis weakened the euro and investors
favored increased dollar holdings.
While a stronger dollar may pressure bullion, “I’m
optimistic on the gold prices
in the long term because of the China demand,” said Zheng. “There are too many
uncertainties now in the global economy, politics and the financial sector.”
ICBC represents more than 20 percent of the turnover on the
Shanghai Gold Exchange, China’s largest spot market for precious metals, and
more than 30 percent of the gold-leasing business in China, according to Zheng.
The lender accounted for about 16 percent of nationwide bullion sales last
year.
Gold imports by mainland China from Hong Kong climbed 65 percent
to a record 103.6 tons in April, according to data from the Census and
Statistics Department of the Hong Kong government released on June 5. The
increase came even as Lao Feng Xiang Co. (900905), the mainland’s
biggest gold-jewelry maker, said in May that gold-demand growth in China may
stagnate this year as falling prices put off investors and an economic slowdown
crimps sales.
Hurt Exports
The second-largest economy expanded 8.1 percent in the first
quarter, the slowest pace in almost three years as Europe’s crisis hurt
exports. Should Greece
exit the euro, the expansion may slow to 6.4 percent in 2012 without stimulus,
China International Capital Corp. said on May 23.
China, which on June 7 announced the first cut in borrowing
costs since 2008, has curbed property investments to avoid a bubble. The Shanghai
Composite Index (SHCOMP) declined 15 percent in the past year, while
spot bullion gained 5.4 percent.
On a three-month basis, gold demand in China eclipsed
India’s over the past two quarters, according to the World Gold Council. The
increased wealth of China’s middle class is helping to drive consumption, Albert Cheng, the
council’s Far East
managing director, said in an interview in May.
Last Resort
Greek voters are set to go the polls for the second time in
two months on June 17 in a vote that may determine whether the country stays in
the 17-nation euro. Goldman Sachs Group Inc. (GS) said gold remains
the so-called currency of last resort, forecasting a rally by year-end,
according to a May 9 report.
Spanish Economy Minister Luis de Guindos said on June 9 that
he would request as much as 100 billion euros ($126 billion) in emergency loans
from the euro area to shore up the country’s banking system. That, coupled with
weekend trade data from China, helped to boost stocks and commodities today.
As China allowed investors to buy and hold gold only in
recent years, “there’s explosive, pent-up demand because the Chinese have an
attachment to gold,” said Zheng, predicting that growth in investment demand
will beat the expansion in jewelry sales. “There’s great potential for
expanding China’s physical-gold investment market.”
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