Mainland Chinese Gold Buying Keeps Increasing

Boosted by inflation, demand for gold in mainland China jumped up to 200 tonnes in the first two months of this year. The figure comes from UBS, which has a $1,500 target for the next six months.

“China is the big buyer,” Peter Hickson, global commodities strategist at Switzerland’s largest bank, said by phone yesterday, without giving a comparable figure for 2010. The estimate for the two-month period compares with full-year consumer demand from China of 579.5 tons for last year, according to the World Gold Council, a producer-funded group....

“Chinese interest is huge,” said Peter Tse, Hong Kong- based head of precious metals at Bank of Nova Scotia. “Demand for physical gold and imports has increased substantially” due to the Lunar New Year holiday, Tse said today, referring to the week-long break that began Feb. 2.

Another commentator, the World Gold Council's China representative Wang Lixin, says Chinese demand might increase 40-50% this year because there aren't many alternatives to the metal for inflation protection. Minalnad Chinese depositors currently lose 1.2% after inflation is factored in.


No wonder why other forecasters are calling for $1,600 gold this year.