Gold rose in Hong Kong on Friday, then spent the whole day cruising leisurely within a range between $905 and $915, with a slight bias to the upside late in the day that resulted in a finish at $913.10/oz., up $9.30. For the week, gold was strong, adding 5.1%.

Platinum also experienced no sharp moves, trading tight between $1170 and $1180 all the way through, and ending in the middle at $1175, down $4. For the week, platinum slipped 2.5%.

Silver was as listless as its sister metals, trading inside a 20-cent range for most of the day before edging above it at the noon hour and leveling off through the rest of the Comex and the Globex to close at $12.90/oz., up 8 cents. For the week, silver rose a robust 8.5%. (Click here for charts)

The precious metals obviously spent yesterday digesting the gains of the previous several days, and the fact that this didn’t lead to more profit taking and a descent into red numbers for gold and silver had to be heartening to aficionados.

As gold marked its first week of gains in the past five, any potential selling was likely muted by news that China has nearly doubled its gold reserves since 2003, surging to become the world’s fifth largest holder.

The official Xinhua News Agency reported that, according to the head of the State Administration of Foreign Exchange, China has increased its gold reserves by 76% over the six-year period, to 1,054 metric tons (nearly 34 million ounces), mainly through domestic buying and scrap refining.

That makes a great deal of sense in light of China’s repeated assertions that it needs to diversify its nearly $2 trillion stockpile of foreign exchange reserves. Bullion buying clearly reflects efforts in that direction.

“This news is highly significant for the gold market,” wrote John Reade, UBS AG’s head metals strategist in London. “It will raise expectations of further Chinese purchases. It may also trigger purchases from other central banks.”

“Gold has been given a further boost on the back of the China reserve news,” added James Moore, of TheBullionDesk.com. “But the metal now needs to clear trend-line resistance around $916 to confirm the return of more bullish sentiment and target the $940 area.”

“Bear-trending forces are still in control of the gold market,” said Ralph Preston, a Heritage West Futures commodity analyst in San Diego. However, he admitted, Friday’s action could “reinvigorate the bulls and should spark a rally to test $930 an ounce resistance,” since the price topped $910.

Source: Gold, Silver Continue Higher

Last 5 posts by Doug Casey

• Resource Stock Roundup:Monday, July 27, 2009 - July 27th, 2009
• Base Metals Higher - July 27th, 2009
• Crude Continues to Climb - July 27th, 2009
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• Gold Pushes Through $950 - July 27th, 2009