China's gold demand is increasing
Beijing-China (Sept 2) Physical Demand in China is increasing via various sources.
Agricultural Bank of China, the country’s third-largest lender, held 21 billion yuan of precious metals as of June 30, the equivalent of about 81 tons of gold. That compares with 17 billion yuan, or 70 tons of gold, a year earlier, according to its second-quarter financial report. A Beijing-based spokeswoman for the bank declined to comment.
Bank of China’s precious-metals holdings were 215 billion yuan at the end of June, or the equivalent of about 823 tons of gold, compared with 570 tons a year ago, financial data show. Nobody answered two calls to the bank’s press office in Beijing.
Holdings may be capped as physical demand slows and the use of commodities to raise financing is scaled back, according to Na Liu, a China strategy adviser to Scotiabank. The nation’s gold consumption plunged 52 percent to 192.5 tons in the second quarter from a year earlier as buyers purchased fewer bars, coins and jewelry amid a clampdown on corruption, the World Gold Council said Aug. 14. As much as 1,000 tons of gold may have been used in financing deals in China, the WGC said in April.
Investigations into the fraudulent use of raw materials as collateral in loans may also reduce demand for precious-metals leasing, according to Liu Xu, a Beijing-based analyst at Capital Futures Co. Banks are increasing scrutiny of commodities financing as public security officials probe whether copper and aluminum were pledged multiple times at the port of Qingdao.
Source: Bloomberg