China sovereign fund sees gold price rebound on global recovery

BEIJING (Reuters): World gold prices will pick up over time as a global economic recovery gains traction, a senior official of China’s $482-billion sovereign wealth fund said on Wednesday.

Gold has fallen about 18% so far this year after an unbroken 12-year string of gains. It rebounded to $ 1,381.80 an ounce on Wednesday after tumbling to $ 1,321.35 the previous day.

“Gold is still the most important (component of) reserves of the economies. The fast growth of emerging market economies means that the supply of gold will not be that much,” said Jin Liqun, Chairman of the Supervisory Board of China Investment Corp.

“Gold prices should go up over the long-term,” he said on Wednesday on the sidelines of a business conference, but did not give an exact timeline.

He said the current decline in gold prices would moderate if the US economy recovered this year and debt distress in the euro zone economies eased.

CIC’s investment exposure to gold was limited, Jin said.

“We invest in gold as part of investment instruments, but not on a big scale,” he said. “We have been doing well on this aspect.”

The company’s 2011 Annual Report showed it had no gold investment in its portfolios.

CIC is looking to invest in European companies where there is access to high-level technologies, Jin said.

“European countries have very good technology. There have well-managed companies that are having difficulties because of macroeconomic problems,” he said.

CIC would also continue to explore investment opportunities in neighbouring countries in Asia and in Japan despite tension between Beijing and Tokyo, he said.

CIC, which manages a slice of China’s foreign exchange reserves – the world’s largest at $3.44 trillion – still has some cash at its disposal from its last government injection of cash in 2011, Jin said.

“We are not rushing to get more money at this moment, but eventually when we invest all of the resources. I do believe CIC will need new money in the future,” he said, when asked if the sovereign wealth fund would request a new capital injection.