Thursday, May 2nd 11:22 AM IST

China housewives help Gold during price plunge

# China gold rush  # largest gold consumer  # china housewives  

China's latest hunger for gold began in middle of last month following a decline in global gold prices after Cypriot authorities made a commitment to sell excess reserves.

BEIJING(BullionStreet): What could be the major reason behind gold's immediate come back from the recent plunge, some says it's the bulk buying Chinese housewives.

"Chinese housewives" spent 100 billion yuan ($16 billion) over the past two weeks purchasing 300 tons of gold and thus helping to sustain gold prices at $1,468 an ounce, according to "Voice of China" a radio program.

The program said 'Chinese gold rush"' has prevented short selling, where gold is sold and then bought back when prices fall.

China's latest hunger for gold began in middle of last month following a decline in global gold prices after Cypriot authorities made a commitment to sell excess reserves.

On April 12 and April 15, international gold prices dropped by 15 percent, from $1,560 per ounce to $1,330 an ounce.

On April 13, China National Gold Group, the country's biggest gold producer, slashed the bullion price from 313 yuan per gram to 298.5 yuan per gram, the lowest level in two years.

This triggered the enthusiasm of Chinese shoppers, who swarmed into jewelry shops desperate to get their hands on a bargain.

In most Chinese cities, gold bars were selling like hot cakes and some even reported empty inventory during the May Day holiday.

According to media reports, some people even spent more than 10 million yuan in purchasing gold, a product considered to bring good fortune in China in addition to its value as a long-term investment.

The number of Chinese gold buyers and the money they spent caught out those investment bankers who had bet on prices continuing to fall.

Some critics said the fall in gold prices was a well-planned scheme drawn up by investment bankers to bolster the US economy, as two days before the price slump.

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