ICBC: Chinese gold demand growing rapidly

Demand for gold in China is growing at an "explosive" rate, according to Industrial and Commercial Bank of China (601398.SH, 1398.HK). The bank sold about 7.7 metric tons of physical gold in January alone – nearly half the sales volume for 2010 as a whole. "As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation," Zhou Ming, deputy head of ICBC’s precious metals department, told Reuters. Zhou also revealed that the value of gold-price-linked deposits issued in just a few days in January exceeded the US$152 million issued throughout 2010. He expects such deposits to grow fivefold in 2011. Beijing has promoted gold as an investment option, and last August expanded the number of banks allowed to import bullion. Zhou added that ICBC also sold about 14.3 tons of physical silver in January.