Metals News
China Has 'Ammunition' to Move Gold Price
industry news
13:44PM
Source:SMM

Monday December 1, 2014, 11:09am PST

In an article published Monday, Mineweb's Lawrence Williams notes that though gold has recovered from its drop following the  Swiss referendum, gold market participants could nevertheless “be in for a volatile few days.”

But what about further into the future? Williams looks at a number of scenarios put forward by analysts, but ends by noting that “should China want to make a specific impact on the gold price it has all the ammunition it needs to do so.”

He states:

"There is a very strong belief among many analysts that China is building its gold reserves to at least match, or perhaps exceed those of the US, and if it should come clean and announce a major increase in its reserves – the last time it did so was nearly six years ago – this would give an immediate massive fillip to the gold price and is a scenario those traders short gold must dread.

Or, even if this is not the case, should China wish to see the gold price rise in order to keep its citizens who have purchased gold happy (they were effectively encouraged to do so by the government-owned banks) or to embarrass the West, it has enormous foreign exchange reserves available to intervene in the market and buy physical gold sufficiently to turn the markets around strongly.

Click here to read the full Mineweb report.

 

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