China gold purchases not 'very necessary' now: official

The world's total existing gold value is about US$1 trillion so the liquidity of the market “isn't that good,” Zhang Yuyan, an economist at the Chinese Academy of Social Sciences, or CASS, told reporters at a Beijing forum. CASS is a think tank directly under the State Council and its mission is to undertake key state research projects.

India's central bank said this week that it bought 200 metric tons of gold from the International Monetary Fund last month at market prices. Gold has reached successive records this week after the announcement and following the Federal Reserve's pledge to keep borrowing costs low, sending the dollar lower and boosting the appeal of the metal as an alternative asset.

China can buy some gold to help diversify its resources, but it “doesn't sound very necessary” after the price rose, Zhang said.

China has increased its gold reserves by 76 percent since 2003, to 1,054 tons, the official Xinhua News Agency reported in April. Gold for immediate delivery reached a record US$1,097.72 a ounce yesterday. It last traded at US$1,089.32 at 6:39 p.m. in Beijing.

The Reserve Bank of India paid an average of US$1,045 an ounce for the IMF gold, according to a fund official. The US$6.7 billion purchase increased its holdings to about 557.7 tons.

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