Speculation mounts as gold prices continue to fluctuate

Chinese housewives who snapped up gold amid the mid-April tumble are believed to have led to a rebound in international gold prices. But gold prices have once again plummeted, falling on May 6, with many now believing that the group’s contribution was fleeting and they are not the invisible hand that helped stabilize gold prices, reports Shanghai’s First Financial Daily.

The unique group of investors are a much touted phenomenon in China. The women, who mostly reside in China’s first-tier cities, beat Wall Street tycoons in gold buying, reportedly purchasing a spectacular 300 tonnes of gold within a ten day period, accounting for 10% of the world’s annual gold production, the paper said.

But the recent price fluctuations, with gold prices plummeting again on May 6, has led many to question who was behind the short selling in the international market. Many suspect that the Chinese government may behind the purchases, as the stabilization of gold would help Beijing’s bid to internationalize the renminbi.

According to industry analysts, the US and Europe have previously suppressed rising gold prices in order to weaken gold as an international reserve currency. They also wish to deter foreign countries from turning to gold reserves as a safe haven, rather than invest in the US dollar or euro.

Approximately 236 tonnes of gold was traded during the month of April alone, with over 64 tonnes sold between April 15-19 and 117 tonnes between April 22-26, according to the Shanghai Gold Exchange.

Around 53% of the gold traded during the month was by Chinese banks, while the remaining 47% was by banks on behalf of their clients, confirming speculation that Beijing is behind the gold purchases, the First Financial Daily said.

Among the top Chinese banks that purchased gold were the Bank of China — the country’s biggest foreign exchange bank, the Industrial and Commercial Bank of China and China Minsheng Bank.

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