Gold prices projected to rise by 29%, as China not relenting on demand levels

According to a Business Insider report seen by Zambia Monitor on Wednesday, gold prices is scheduled for a historical boom and may trade around US$3,000 per ounce, quoting economist David Rosenberg.

In a note on Monday, Rosenberg is said to have outlined why he expected gold prices to continue their record bull run to US$3,000 per ounce, representing a potential upside of 29 percent from current levels.

Rosenberg said China’s Central Bank was on a gold buying spree, having bought gold reserves for 17 months in a row adding that it could have a lot more to buy up as it pushed its gold reserves to levels comparable with another Central Bank.

“China’s drift from the US is behind its slow but steady rotation from US dollar reserves to gold and also means the end of the Yuan as a potential second reserve currency (pushing other central banks back toward gold),” Rosenberg said.

Over the past year, the report stated that China alone had purchased about 181 tonnes of gold and that it was now the sixth-largest holder of gold reserves, bringing its share of total reserves to 4.3 percent in March.

“The US holds 70 percent of its reserves in gold. So there is incredible room to run for the PBOC over the next few years just to approach the global benchmark of gold reserves,” Rosenberg added.

If China added just one more percentage point of gold to its reserves, that would imply 420 tonnes of gold, which alone would consume 11 percent of new production.

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