TORONTO (miningweekly.com) – An announcement by China that it had secretly increased its gold holdings by more than three quarters is an indication of the important role played by the yellow metal in central bank reserves, the World Gold Council (WGC) said.

Chinese buying could lead to a structural shift in gold holdings, the industry body suggested.

The gold price leapt 1% on Friday, after the head of the State Administration of Foreign Exchange, told Xinhua news agency that the country's reserves had risen by 454 t, from 600 t in 2003, when China last adjusted its state gold reserves figure.

“The Chinese government’s decision further demonstrates the leadership it is increasingly taking and its public recognition of gold’s proven role as a store of value and portfolio diversifier,” WGC CEO Aram Shishmanian said in a statement.

“We are closely monitoring developments at other central banks to determine whether they will follow China’s bold and thought-leading move, particularly those in Asia.”

The Chinese announcement was evidence “of the growing recognition of gold’s growing prominence in providing stability in the uncertain financial markets, not only as a reserve asset but in the investment markets also,” Shishmanian added.

Chinese gold reserves are now the fifth largest among national central banks in the world after the US Germany, France and Italy.

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