Gold at five-year low

London - China ends mystery of bullion hoardings

Gold fell more than one per cent to its lowest in five years on Friday, pressured by a strong dollar and US data that increased bets on a Federal Reserve rate increase this year, while platinum hit lows not seen in more than six years.
Spot gold dropped 1.1 per cent to its lowest since April 2010 at $1,130.80 an ounce and was down one per cent at $1,131.50. It was on track for a 2.7 per cent weekly fall, the biggest since early March.
"The weakness we are seeing is related to the strength of the US dollar ... and the bearish momentum is sustained by psychological levels being breached, like the $1,000 mark in platinum," said Norbert Ruecker, head of commodity research at Julius Baer.
Platinum broke below $1,000 an ounce for the first time since early 2009 due to oversupply, sluggish demand and weaker gold prices, which encouraged speculative selling, analysts said.
"Platinum is suffering from low liquidity and the kind of storm it has been facing in the past few weeks has created some scepticism towards the metal," Saxo Bank senior manager Ole Hansen said.
The dollar was set for its biggest weekly rise since May on strong US jobs data, while global shares edged down after strong gains as Greece looked set to secure a bailout.
"If we take out the $1,140 in gold and we close below it, the shorts in both platinum and gold will still have the upper hand," Hansen said.
"Gold is finding a lot of headwinds from multiple sources: we have seen the Greek risk fade and the focus return to the US and Janet Yellen."
Non-interest-bearing gold, which is on track for a third year of losses and down more than 3 per cent so far, has been struggling ahead of an expected US rate rise, which would increase the opportunity cost of holding the metal.
Federal Reserve Chair Janet Yellen told Congress the US central bank is on track to lift interest rates this year if the US economy expands as expected.
Gold's fall, however, has failed to spur demand in top consumers in Asia with domestic prices in No. 2 market India remaining at a discount to global spot prices.
Bullion reserves
China's gold reserves increased by 57 per cent to 1,658 tonnes over the past six years, accounting for just for 1.65 per cent of total forex reserves, data showed.
Palladium slipped 2 per cent to $616.20 an ounce after dropping to $614, its weakest since November 2012.
Spot silver was down 0.7 per cent at $14.86 an ounce.
China ended six years of mystery over how much gold it's hoarding, revealing a 57 per cent jump in reserves and overtaking Russia to become the country with the fifth-largest stash of the metal.
"The market has been speculating on the size of China's gold reserves for years and the central bank has always been reticent until now," Fu Peng, a portfolio manager at Lianzhan Global Macro Fund Management, said from Beijing.
China boosted bullion assets to 53.31 million troy ounces, or about 1,658 metric tonnes, the People's Bank of China said in a statement on Friday. That's up from 1,054 tonnes in 2009, when it last updated the figures. The US has the biggest reserves at 8,133.5 tonnes, data from the World Gold Council show.
Gold prices were little changed in reaction as the gain was much less than some had reckoned. Bloomberg Intelligence this year estimated a possible tripling to 3,500 tonnes, based on domestic output, and China Gold Association and trade figures.
"People were expecting that they have bought a lot more," Mark O'Byrne, executive director of Dublin-based brokerage GoldCore Ltd, said. "That's why we haven't seen much of a movement so far today. The big question is whether they now continue buying."
Gold remains a large part of many central banks' reserves, decades after they stopped using it to back paper money. Stockpiles of the metal help China to diversify its foreign-exchange holdings as the world's second-largest economy seeks to raise the international profile of its own currency. The disclosure on gold reserves also assists in that goal.
Nations have expanded gold holdings in the past few years, a reversal from two decades of selling since the late 1980s. Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge against volatile currency movements, according to the World Gold Council.

• Gold and Forex