China, the world’s largest gold producer, could have record demand and output this year as jewelry consumption soars and miners expand production after prices reached all-time highs, the China Gold Association said.
The country’s gold demand may be more than 450 tonnes this year, up from 395.6 tonnes last year and output could climb to 310 tonnes, compared with 282 tonnes a year earlier, Zhang Yongtao (張永濤), deputy secretary-general of the association, said at a conference in Kunming, Yunnan Province, yesterday.
Annualized growth in China’s gold production was 9.5 percent in the past eight years, he said.
China overtook South Africa to become the world’s largest producer in 2007 and the World Gold Council said in July that the nation may pass India as the biggest consumer.
Bullion touched a record of US$1,195.13 an ounce on Thursday as a weaker dollar drove demand for precious metals as an alternative asset.
“The inflation concern this year has boosted the Chinese consumer demand for things like property, autos and gold,” Zhou Shijian, professor at Tsinghua University, said yesterday.
Bullion, up 34 percent this year, is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect their assets from potential currency debasement and inflation. Gold may climb to US$1,500 an ounce as the dollar falls amid low interest rates, Kenneth Tropin, chairman of Graham Capital Management, told Barron’s in its issue released today.
Gold for immediate delivery declined 0.9 percent to US$1,177.63 an ounce on Friday as commodities slumped the most this month after Dubai sought to defer some debt payments, rattling investors and spurring a dollar rally. Bullion found support from IMF sales to central banks.
Sri Lanka bought 10 tonnes from the IMF for about US$375 million, the IMF said, following India and Mauritius.
“Record prices boosted profitability of Chinese miners, giving them [an] incentive to expand production,” the gold association’s Zhang said in a speech.
Shares of Chinese mining companies have jumped this year with Zijin Mining Group Co (紫金礦業集團), the nation’s largest gold producer, more than doubling, outpacing a 70 percent gain in the benchmark Shanghai Composite Index.
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