Gold surged more than $19 an ounce to $635 in New York trading after China's central bank chief said...
Gold surged more than $19 an ounce to $635 in New York trading after China's central bank chief said the country was eyeing "lots of instruments" as alternatives to US dollar reserves.
The scale of Chinese holdings means any move would shake up the currency markets, with a leveraged effect on the tiny gold sector. China holds roughly 70pc of its reserves in dollar instruments such as mortgage bonds. Dennis Gartman, a gold veteran and publisher of the Gartman Letter, told an RBC conference yesterday that China's moves to diversify reserves would power gold upwards for years to come.
"China holds 1pc of its reserves in gold, which I expect to rise to 5pc-6pc over the next 15 years. China will be a quiet, consistent, slow taker of gold," he said. He predicted Beijing would keep its dollars but use fresh reserves to buy euros and gold. It is unclear whether the poisonous trade relations between Beijing and the EU could cause China to lose its enthusiasm for the euro.