Yuan Devaluation Is Good News for Gold Bulls: Bloomberg Intelligence

Kitco News -- The sentiment in China will continue to be bearish, with one market expert noting that ‘everything is falling off a cliff,’ in the country. Speaking to Kitco news on Friday, Ken Hoffman, sector head of global metal and mining for Bloomberg Intelligence said that, ‘China is in decrease mode [and] we actually think their copper demand, for the first time in 30 years, will actually decline by 2-4%.’ He explained that as the country shifts from an industrial-based economy to a more information technology-based one, old businesses -- steel, copper, cement -- are going to be hurt. Hoffman also commented on the recent surprise move by the Chinese central bank to devalue its currency, the yuan. ‘One of the biggest points that China has right now is to make the yuan more global,’ he noted, adding that the weakening of the yuan is helping gold. ‘If China is going to devalue its currency, that’s going to be very positive for gold demand in China, the world’s largest gold buyer,’ he explained. Speaking on the recent release of gold reserve holdings by the People’s Bank of China, Hoffman said that, ‘even people in the country don’t believe the numbers that were released.’ ‘There is a way central banks can sort of hide gold [holdings],’ he remarked. However, he noted that gold continues to play a very important role in the country’s currency strategy. China still has a 'strong and sincere interest in gold,’ he added. On Friday, gold prices continued their winning streak, hitting a six-week high. December Comex gold was last up $5.10 at $1,158.30 an ounce.