The growing significance of China in boosting the global gold trade was acknowledged by industry experts at a recently concluded industry conference organized by Dubai Multi Commodities Centre (DMCC) in Dubai. Participants in the inaugural “DMCC Gold Convention 2009: Year of the Bull or Bear?” highlighted that China's gold reserves, which rose rapidly to reach 1,054 tons this year, will re-ignite gold's relevance as a monetary asset. During the panel discussion, experts also observed that with China now being the world's largest producer of gold, the country has tremendous potential to boost the level of worldwide gold trade despite the global current economic slowdown. “Since the establishment of DMCC, there has been a strong effort to boost gold trade ties between Dubai and China. As a major hub for gold, Dubai has much to offer to China in fostering trade opportunities and sharing expertise,” said Ahmed bin Sulayem, executive chairman, DMCC. “Linking Chinese gold traders with Dubai can open doors to a wide range of opportunities with gold producing and consuming nations across the Middle East, Africa and Europe.” At the DMCC Gold Convention, experts emphasized that gold price will continue to see fluctuations based on three criteria: industrial demand, long-term holders of gold reserves, and gold's safe-haven appeal. However, it was projected that for most part of 2009, gold prices will average within the $850 to $1,050 per ounce range. Harendra Kailath, director - Gold Division, DMCC, said: “While gold accounts for a relatively small portion of China's total foreign exchange reserves, it is still a phenomenal amount for the global gold industry. As the world's fifth largest holder of gold, China is attracting immense speculative interest on further increases in its gold reserves. This is creating a more positive sentiment towards gold.” WGC said the rise in investment demand has more than offset the drop in jewelry demand worldwide. Gold was cited as being an “excellent portfolio diversifier,” as its correlation with most other assets was very minimal. According to GFMS, mine production is expected to increase slightly in 2009. In the past few years, gold mine production was at “stable-to-decreasing levels” except for China, which recorded a 12-ton gain, representing a four per cent year on year increase. China's supply of gold scrap rose by 50 tons in 2008 and is estimated to remain strong during 2009. Walter de Wit, head of Commodities Research at Standard Bank Plc, said the investment case for gold still remains strong, although it can be affected if prices continue to remain high. He added that if gold becomes the “official” reserve currency for many central banks, there will be sustainable support for gold. “As we continue to strengthen trade relations with China, we look forward to working with the Chinese jewellery industry for mutual exchange of knowledge and business opportunities.” __
