Increase in China's gold reserves stimulates market

Gold rose to a three-week high on the London exchange on Friday after a report that China’s gold reserves have increased by 76% since 2003, Bloomberg reported. According to the State Administration of Foreign Exchange (SAFE), China holds 1,054 metric tons of the precious metal. “The Chinese gold-reserve story and reports of strong physical demand in India, Dubai and other demand centers have propelled [prices],” said Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai. The Chinese report raised hopes of more purchases by Beijing as the government seeks to diversify its massive foreign exchange holdings, he added. The metal for immediate delivery gained as much as US$8.90 (1%) to US$913.21 an ounce following the news. June gold futures climbed 0.5% to US$910.80 an ounce in electronic trading on the New York Mercantile Exchange’s Comex division Friday.