ECB sells off 42 tonnes of gold reserves; will China start buying?

ECB sells off 42 tonnes of gold reserves; will China start buying?

By Jane Louis 03 Dec 2007 at 11:41 AM

The European Central Bank announced it sold 42 metric tonnes of gold Friday. According to the World Gold Council, that accounts for almost half of the 103 tonnes sold off by central banks in the past two months (see RI's full coverage). The sell-off supported gold's recent correction, but gold could be in for a rally when emerging economies - specifically China and Russia - start stocking up on reserves, according to a Seeking Alpha commentary. "A move to increase gold holdings by China appears to be a question of when rather than if, because at the rate with which they are piling up forex reserves, the weighting of gold in China's reserve portfolio is actually decreasing. When China starts buying, gold will begin the next leg up in its bull run," the commentary said. Russia has already begun buying gold, adding 310,000 ounces in October for a total reserve base of 1.5 million ounces. Gold futures are up $4.10 at $793.20 today on the New York Mercantile Exchange.