Beijing adds to Chinese gold rush

CHINA could consume a record amount of gold this year, possibly because the central bank is diversifying its reserves.

CHINA is on pace to consume a record amount of gold this year, which may be partly due to the central bank diversifying its foreign-exchange reserves, analysts say.

China imported about 861.4 tonnes of gold via Hong Kong in the first eight months of the year, more than double the 361.02 tonnes during the same period last year, according to the Hong Kong Census and Statistics Department. Imports from Hong Kong fell in August from the previous month but remained elevated, the data showed.

Gold prices hit a three-year low in June but have since rebounded. Strong demand in China is driven largely by consumers, and jewellers are restocking following a spike in buying in April, when prices began tumbling. But analysts say the People's Bank might also be taking advantage of the lower prices to bulk up its reserves.

"My suspicion is that they (the Chinese government) are increasing their gold holdings as part of their foreign reserves," said Joyce Liu, an investment analyst with Phillip Futures in Singapore.

The World Gold Council has estimated that Chinese imports this year will top 1000 tonnes, believed to be a record amount.