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.