* Gold rises nearly $10/oz to three-week high
* China reveals 75 pct surge in gold reserves since 2003
* Speculation of more to come as Beijing diversifies FX
* Financial and economic worries persist, supporting gold
By Chikako Mogi
TOKYO, April 24 (Reuters) - Gold rose 1 percent to a
three-week high on Friday after China said its gold reserves
had surged by nearly three-quarters since 2003, confirming
years of speculation and raising hopes of more purchases to
diversify its foreign exchange holdings.
A senior Chinese official was quoted as saying on Friday
that Beijing had raised its gold reserves by 454 tonnes to a
total 1,054 tonnes, the last time it revealed the figure. This
makes it the fifth biggest country holder. []
"They are increasing their gold holdings because they are
worried about the dollar. I know if I held $2 trillion in U.S.
Treasuries I'd want to hedge it," Peter McGuire, managing
director at Commodity Warrants Australia, said.
With nearly $2 trillion in foreign exchange reserves, and
gold making up barely 1.6 percent of this, the scope for more
Chinese buying is clear.
"They have a long way to go. Look at the size of their
reserves. They should probably double it at least," said
Jonathan Barratt, managing director of Commodity Broking
Services.
Spot gold <XAU=> rose to $911.80 per ounce by 0639 GMT, up
1 percent from New York's notional close of $902.00. It has
risen 5 percent so far this week, putting it on track for the
biggest weekly gain for two months.
Prices have also been supported by physical demand from
India, the world's largest consumer, ahead of the Akshaya
Tritya festival on April 27, an auspicious time for gold
buying.
Bullion's appeal as a safe-haven asset has been supported
by persistent worries about the global economy and financial
sector, with the market's focus now on the results of stress
tests for U.S. banks due on May 4.
But the gradual return of risk appetite that has also begun
to draw more investors back to beaten-down equity markets has
kept a lid on bullion and even encouraged some selling.
Holdings by the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <XAUEXT-NYS-TT>, fell to 1,104.45
tonnes as of April 23, down 1.53 tonnes or 0.1 percent from the
previous day, extending a decline that began last week in the
biggest unwinding of positions since September. []
A 44 percent surge in SPDR's holdings since the start of
the year had helped underpin gold prices, but the last increase
was nearly a month ago.
With the market's mood fragile, key indicators like U.S.
March durable goods orders and new home sales -- both due later
in the day -- are being closely watched to gauge whether the
recession is beginning to ease, which could trigger more gold
selling as investors shift funds toward higher yielding
assets.
Precious metals prices at 0525 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 911.05 9.05 +1.00 3.51
Spot Silver 12.81 0.07 +0.55 13.16
Spot Platinum 1176.00 -2.50 -0.21 26.18
Spot Palladium 232.00 1.50 +0.65 25.75
TOCOM Gold 2854.00 18.00 +0.63 10.92
20998
TOCOM Platinum 3690.00 -35.00 -0.94 39.14
12407
TOCOM Silver 397.50 7.70 +1.98 24.49
257
TOCOM Palladium 733.00 -5.00 -0.68 33.27
339
Euro/Dollar 1.3174
Dollar/Yen 97.11
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Jonathan Leff)
