China Likely to Limit Gold to 2% of Foreign Reserves

China may limit its gold holdings to 2 percent of its total foreign exchange reserves. The People’s Bank of China last made known changes to its gold reserves in 2009, announcing that it held 1,054 metric tons.

As quoted in market news: Yi Gang, a deputy Chinese central bank governor.

If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers. We can only invest about 1-2 percent of the foreign exchange reserves into gold because the market is too small.

Click here to read full Bloomberg article.