China gold production seen rising 10% to record levels
The China Mining Association expects gold output to rise almost 10% this year to a record even as bullion prices slump.
Author: Bloomberg News
Posted: Tuesday , 25 Jun 2013
(BLOOMBERG) -
Gold output in China, the world’s largest producer, is poised to rise almost 10 percent this year to a record even as bullion prices slump, the nation’s mining association said. Output may rise to as much as 440 metric tons, said Wang Jiahua, executive vice chairman at the China Mining
Association. The country, which overtook South Africa as the largest producer in 2007, had output of 403 tons in 2012, according to data from the Beijing-based group, an affiliate of the Ministry of Land and Resources.
Bullion extended its drop this year to 23 percent and hedge funds cut bets on a rally by the most since February after the Federal Reserve said it may slow a bond-buying program that’s been pumping stimulus into global markets. That hasn’t deterred buyers in the second largest economy, which may pass India as the largest gold consumer as early as this year as regulators in Beijing make investing in the precious metal easier. “Gold’s role as a tool for wealth protection is still widely recognized in China,” Wang said in interview in Zhaoyuan, Shandong province, on June 21. “The global economy isn’t out of the woods yet -- the European sovereign debt crisis hasn’t been solved and many still wonder if Abenomics in Japan will work, so gold’s downside should be limited.” Production gained 12 percent in the first four months from a year earlier to 122.89 tons, according to the producer funded China Gold Association, which publishes estimates monthly.
“We haven’t heard of any Chinese miners opting to lower production because of the gold rout,” said Le Yukun, head of metals and mining research at BOC International China Ltd. in Shanghai. “All we can see now is that the slump in gold prices will curb investor interest in gold-mining assets.” Every 10 percent drop in gold prices is likely to reduce profits at Chinese gold miners by at least 20 percent, according to Le. Gold rose 0.3 percent to $1,285.65 an ounce at 7:07 a.m. Beijing time. The precious metal fell 6.8 percent last week. Goldman Sachs Group Inc. cut its forecasts for gold through 2014 after selling quickened as investors priced in expectations of reduced asset purchases by the Fed. In a report dated June 23, the bank cut its target for the end of this year to $1,300 an ounce from $1,435 and lowered its prediction to $1,050 from $1,270 for the end of 2014,
Investors sold 533.3 tons from bullion-backed exchange- traded products this year, wiping out more than $54 billion from the value of the funds.
