China Appetite for Gold Increasing as They Battle Property Inflation

The battle by China against property inflation in the first half of 2010 has increased demand for gold in the country, according to the Shanghai Gold Exchange.

For the first half of the year, the amount of gold traded on the exchange increased by 59 percent, equal to about 3,174.5 metric tons.

It's cousin silver also performed much stronger, increasing by five times over last year.

“I expect China’s gold demand to rise by 11 to 12 percent this year to 440 to 450 tons because Chinese investors have shown their willingness to buy more when prices are on the rise,” Hou Huimin, deputy secretary-general at the China Gold Association, said today. “I expect prices will rise over the remainder of this year and next year.."

Song Yuqin, vice general manager at the Shanghai Gold Exchange, said along with property markets, other reasons for the increase in gold investing was the sovereign debt crisis in Europe and the volatility of the financial markets.