Gold Buying 'may rise' as China backs new global reserve currency

HSBC analyst James Steel has highlighted China's request to discuss a new global reserve currency as a major boost for anyone with a Gold Investment.

According to a Reuters report yesterday (July 1st), the country is planning to challenge the dollar's position at a meeting of the Group of Eight in Italy next week.

With the greenback traditionally moving in the opposite direction to Gold Prices, Mr. Steel explained that the news will be welcomed by investors currently holding the yellow metal.

He told the Wall Street Journal: "The Chinese news has had a big impact. Gold was beginning to cut its gains when that came out. It has changed the complexion of the market."

China has already shown its favor for gold in recent months after it emerged that it has increased its reserves of the metal by 454 tonnes in the past six years alone.

Andrew Montano, a director at Toronto-based bullion dealer ScotiaMocatta, backed up Mr. Steel's observations that the signals all appear to be positive for gold.

"The China news is the factor for today. That was driving the currencies, which are driving the gold," he said in an interview with Reuters.

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