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Top 5 ways China affects the Gold Prices in USA

Gold is considered as one of the safest means of investments. The prices of gold tends to rises and decline with global events. China is one of the most important countries affecting the gold prices in USA and in the international market. Here are 5 ways by which china affects the Gold prices in USA:

 

Chinese Gold imports and Gold prices in USA

China is currently second largest importer of gold in the world. Its gold imports are directly connected with its local gold consumption.It has imported 217 tonnes of gold in just one month of December 2015. It has imported more than 1000 tonnes of gold in 2015 and that is just from Hong Kong. China imports gold to be used in the different kinds of important industries. It is mostly used in Jewelry, watch and coin industry of the country. The increase in the gold imports also increases the gold demand in the international market. This increase in demand also pushes the prices up in the American gold market.

 

Chinese economy and Gold prices in USA

China is one of the fastest growing economies in the world. It was one of the greatest economic success stories of the last few decades. But growth rates of Chinese economy started falling from last year. The annual economy growth for the year 2015 was 6.9 % and that was weakest growth rate in last 25 years. The slowing down of the Chinese economy and some other international factors have put pressure on the gold prices as investors started investing in the safe haven investment options like Gold. The gold prices in the year 2016 have showed 21.30 % growth between January 2016 and May 2016.

 

Gold production

China is the largest gold producing country in the world. It makes a significant contribution in the international gold market.According to the latest figures ,it produced 490 metric tons of gold in the year 2015.It production has increased at average rate of 6.66 % in last two years. The increase in the Chinese gold production has improved the gold supply in the international gold market. This improvement in supply has played an important role in the falling trend of the gold prices in USA.

 

Gold consumption

China is the largest gold consumer in the world. The largest consuming countries of the gold can be checked from the figure given below.

Gold prices in USA

Source : Statista

According to the latest figures, it consumes 40 % of the world’s gold every year. When gold consumption increases in the China, it also affects the gold prices in USA and also in the international market.

 

Gold reserves by the government

China has the fifth largest gold reserves in the world. According to the figures, china currently holds 1797.5 tons of gold reserves and these reserves are 2.2 % of the foreign exchange reserves of the country. Its gold reserves are increased from 1054 tonnes of gold in mid 2009 to 1797.5 tonnes  in the year 2015-16.The hoarding of gold of china increases the demand of the gold in the international market. This increase in demand increases the gold prices in USA and also in the international market.

 

 

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About Emaad Qureshi