HONG KONG: China should increase its gold holdings to around 5% of its total foreign exchange reserves to help diversify currency risks, the World Gold Council (WGC) said.
China currently holds about 1.6% of its foreign exchange reserves in gold, which is relatively low compared with developed countries and some developing countries, WGC China managing director Roland Wang said.
“The ideal amount should be at least 5% of its total forex reserves," Wang told Reuters in an interview in Hong Kong.
China last raised its gold holdings in April 2009, when reserves rose to 33,890,000 troy ounces (about 1,054 tonnes), from 19,290,000 troy ounces, according to central bank data. The holding was unchanged as of December 2014. Data for 2015 was not available on the central bank’s website.
China’s holdings as a percentage of total reserves in the fourth quarter of last year compare with 2.4% for Mexico, 5.7% for Australia, 6.7% for India and 12.1% for Russia, according to WGC figures.
Wang said the gold council was in regular communication with Chinese authorities, including the country’s central bank and China Gold Association.
Increased gold holdings could boost investor confidence at a time when China was pushing the internationalisation of the yuan, he added.
China’s gold consumption fell to 886 tonnes in 2014, down 25% from a year earlier. Production climbed 5.5% on a a year early nearly 452 tonnes, according to China Gold Association figures. — Reuters
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