China sur­prises for a sec­ond time this week with more gold data


For a sec­ond time this week, China sur­prised mar­kets. This time, it was in gold. China, the world's big­gest pro­ducer and con­sumer of bul­lion, said on Fri­day that it owns about 1,677.4 met­ric tons of the me­tal. The pre­vi­ous up­date came in July af­ter China had been silent on the size of its hoard for six years. Most an­a­lysts ex­pected the next re­port would take about five years, said Ross Nor­man, chief ex­ec­u­tive of­fi­cer of Sharps Pix­ley Ltd., a Lon­don-based gold dealer. In­stead, it hap­pened in 29 days.

The un­ex­pected up­date of China's re­serves adds to a week that's al­ready seen the first ma­jor de­val­u­a­tion of the yuan since 1994. More reg­u­lar gold re­port­ing from China shows a shift to trans­parency as the coun­try im­proves data qual­ity, in­creases its pres­ence in com­modi­ties trad­ing and pro­motes the yuan on the in­ter­na­tional stage.

"It was quite sur­pris­ing," Mark O'Byrne, the ex­ec­u­tive di­rec­tor of Dublin-based bro­ker­age GoldCore Ltd., said by phone. "It looks like they may start re­port­ing on a monthly ba­sis."

China in­creased its gold re­serves by 1.1 per­cent in July, or about 19 tons, ac­cord­ing to data from the cen­tral bank to­day. On July 17, the cen­tral bank said it owned 1,658 tons, roughly 600 tons more than when it last up­dated in 2009.

"If any­one says they saw this com­ing, they're smarter than me," said Andy Pfaff, the chief in­vest­ment of­fi­cer for com­modi- ties at Mi­tonOp­ti­mal in Cape Town.

Gold for im­me­di­ate de­liv­ery rose 0.4 per­cent to $1,118.99 an ounce by 1:05 p.m. in Lon­don. The me­tal is set for the first weekly gain in eight weeks af­ter climb­ing 2.3 per­cent since last Fri­day's close. China has adopted stricter In­ter­na­tional Mon­e­tary Fund norms for its for­eign re­serves and debt data as it pushes for in­clu­sion of the yuan in the Spe­cial Draw­ing Rights bas­ket. The changes in­cluded monthly re­lease of re­serve data rather than quar­terly.

"Pub­lish­ing their gold re­serve data for the sec­ond month in a row shows they're be­com­ing more trans­par­ent," Geor­gette Boele, a cur­rency and pre­cious met­als strate­gist at ABN Amro Bank NV, said by e-mail from Am­s­ter­dam.

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