Gold rallied 2% following news that China’s state holdings of the metal have been quietly raised by 76% since 2003. Rumours and speculation about Chinese buying have been rife for years, but many market participants remained in denial until this irrefutable proof was given. China is not only the world’s largest mine producer of gold, but also the fifth-largest individual country holder of gold with 1,054t. The most recent move, though, only takes China’s holdings of gold as a share of total foreign exchange reserves to about 1.5%, compared with a world average of over 10%. Given this, it seems very likely that China will continue buying gold, which would in large measure offset sales by European central banks (these are now in decline) and expected IMF disposal. Indded the Chinese could easily buy the IMF’s gold sale of some 400 tonnes as the value of this gold represents a fraction of their huge foreign exchange reserves.