China says gold is unlikely to be primary investment

1110AM GMT 09 March 2010

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Gold, that has risen in cost for 10 true years, is "unlikely" to be a first investment, Yi Gang, the head of the State Administration of Foreign Exchange, pronounced at a press breifing in Beijing today, Bloomberg reported.

The cost has "had large gains in new years," Yi said. But, "if we see at the past thirty years, it had big ups and downs." China has carried the holding of bullion by 454 tons to 1,054 given 2003, withdrawal it with the world"s fifth-biggest holding. After India, China is the greatest consumer of bullion and, according to Mr Yi, augmenting the pot of bullion will "push up prices" and "hurt Chinese bullion consumers."

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The world"s fastest-growing vital economy has amassed immeasurable foreign-exchange pot as it buys dollars to safeguard a diseased yuan helps expostulate the key trade industries. China has invested billions of that in US supervision bonds, creation it the country"s largest creditor, and Mr Yi insisted currently the investment is "very important" and that "China is a obliged investor, and we dont wish to politicise the issue."

The comments come opposite the backdrop of a decrease in family in in between the US and China, that has in jeopardy to levy sanctions on any US organisation that takes piece in a understanding struck in in between Taiwan and the White House.

Gold, that appeals to investors as a sidestep opposite both acceleration and deflation, declined to the lowest turn in a week in London trade on Tuesday. It traded at $1,116.98 an ounce.

"This might have a short-term disastrous stroke on bullion prices as one of the key reasons for the convene in the past year has been the expectancy of executive banks buying," Li Ning, an researcher at China International Futures, told Bloomberg.