By cpowel: China May Limit Gold to 2% of Foreign Reserves, PBOC's Yi SaysBy Xin Zhou:  BEIJING -- China is likely to limit its gold holdings to 2 percent of its total foreign exchange reserves, said Yi Gang, a deputy Chinese central bank governor.
The People's Bank of China last made known changes to its gold reserves in 2009, announcing that it held 1,054 metric tons. The bank hasn't made any revisions since then. That's about 1.8 percent of its total reserves, according to data from the World Gold Council.
"If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers," Yi said today in a press briefing in Beijing. "We can invest only about 1-2 percent of the foreign exchange reserves into gold because the market is too small."
The nation's reserves, which have surged more than 700 percent since 2004, surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012, data compiled by Bloomberg show.
Gold has fallen about 4.7 percent this year as the U.S. stocks extended a record rally amid speculation that the Federal Reserve may rein in stimulus as the recovery gains traction, curbing demand for safe-haven assets.
China was expected to displace India as the biggest gold consumer last year, according to forecast in November from the producer-funded World Gold Council. Chinese investors sought to protect their wealth by buying gold, after government measures to curb real estate prices and as China’s stock market has fallen in the past decade even though nominal gross domestic product rose fourfold.