Gold futures were rising Friday on reports that China has been increasing its gold reserves in recent years.
Futures were climbing $3.70 to $909.60 an ounce at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $906.70 and as high as $911.50 so far during the session.
reported that China has been building its gold reserves substantially since 2003. Hu Xiaolian, head of the State Administration of Foreign Exchange, disclosed that the country now has a total of 1,054 tons, having added roughly 90 tons a year. China's gold buying has been rumored for years, but the country stayed quiet so as not to limit its ability to find favorable prices.
While gold bugs might view the purchases as supportive of higher prices, Jon Nadler, senior analyst at Kitco.com, says if this were truly significant news, gold futures would be trading much higher.
"If you do the math, it's not a big deal.
If China was aggressively buying, gold should have been up more. The reason why China has been buying is that they wish to make their ratio of gold to reserves very constant ... . The amount is in line with the Chinese program to meet its allocation requirement ... no way it means that they are abandoning the dollar.
China is not really worried, if they had been worried they would have been buying more tons over 5 years."
What's really pushing gold higher is India's buying festival and continued jitters about U.S. banks' stress test results. Nadler says "we have not really seen any huge background development that we are going to new highs." Even though gold broke the crucial $900 level, the outside range is at $850 to $950 and the inside range is at $870 to $920. If gold can stay above $920 for several days, Nadler says, than futures could move into the $960 area.
Silver prices were rising 6 cents to $12.81 an ounce, and copper was ticking up 3 cents to $2.05 a pound.
was adding 3% to $39.84, while
was up 2.4% to $29.90.
was gaining 3.4% to $8.19.
was rising almost 4% to $48.66, and the
exchange-traded fund was trading flat at $88.98.
Alix joined TheStreet.com TV in February 2007. Previously, she held positions in film and theater production, management, and legal administration. Alix has a degree in communications and theater from Northwestern University.