China gold output up 6 pct in 2011
Shanghai. February 1. INTERFAX-CHINA - China's gold bullion output grew by 5.89 percent in 2011 to reach a record high of 360.96 tons, up by 20.08 tons from the previous year, making the country the world's largest producer for the fifth year running, the China Gold Association (CGA) said Jan. 31.
South Africa, the world's largest gold producer from 1896 to 2006, has seen output dwindle in recent years. It reported total production of 192 tons in 2010.
China's top five production regions - Shandong, Henan, Jiangxi and Fujian provinces along with the Inner Mongolia Autonomous Region - accounted for 59.9 percent of national output.
The country's top 10 producers, which include China National Gold Group, Zijin Mining Group, Shandong Gold Group and Shandong Zhaojin Mining Co. Ltd., took a 50.98 percent share of total output with a combined 184.02 tons.
The domestic gold market meanwhile saw a marked increase in activity. The Shanghai Gold Exchange, China's sole precious metals spot trading platform, reported transactions worth RMB 2.48 trillion ($393 billion) while trading volumes grew 23.03 percent to 7,438.46 tons. Gold trades on the Shanghai Futures Exchange surged 178.68 percent to RMB 5.1 trillion ($808.2 billion).
Ongoing uncertainties in the global economy helped the price of the yellow metal hit a historic high of $1,920.38 per ounce on Sept. 6. The spot price appreciated 10.1 percent though the year to end at $1,565.02 per ounce and averaged $1,571.68 per ounce during the period, up 28.35 percent from 2010.
Strong interest among retail investors in China helped support prices. This demand, reflected by record gold imports from Hong Kong in recent months, has stimulated buying among commercial banks which are offering an increasing range of gold-related products.
The sovereign debt crisis also encouraged asset diversification among central banks, further boosting purchases. "Since 2009, central banks have been buyers rather than sellers of gold. Further buying in 2011 will make it a record year for central bank purchases since the end of the gold standard in 1971. We see this trend continuing as central banks continue to diversify their reserves to protect their economies," said Aram Shishmanian, CEO of the World Gold Council (WGC).
Although China did not report any changes in official gold reserves last year, high import volumes have added to speculation record that the People's Bank of China has been buying.
Whether this is the case is hard to say, Jiang Shu, senior gold analyst with Industrial Bank Co. Ltd., told Interfax. Many smaller countries have expanded their stockpiles in recent years, but China is likely to be more cautious given the size of its economy, Jiang noted.
The analyst believes China's imports will keep rising this year nonetheless: "Though China is world's largest producer, imports are necessary to meet its burgeoning demand."
Gold prices this year will depend on progress in resolving the sovereign debt crisis and the performance of the U.S. economy. "If unemployment keeps going down in the U.S., we may not see a third round of quantitative easing and gold may fail to break the $2,000 per ounce barrier as a result," Jiang said.
- KHM