Gold Update

The market is ready for a retest of the July 2006 high at $676.00.

Profit-taking ahead of that level stalled the current rally.

Overnight China's National Development and Reform Commission said in a statement that it had set the country's total gold output objective at 1,300 tones for the 2006-2010 period, XFN reports.

China's gold output in 2006 was 240.078 tons - up 7.15% from 2005. In 2007, China plans to produce 260 tons of gold - a historical high for the country.

According to the NDRC, China's exploration target for new gold reserves is 700 tons for 2007 vs 650 tons in 2006.

There was some confusion earlier as some players took the statement to mean a change in China's reserves. However it has nothing to do with FX reserves or diversification - just intentions on exploration and mining and China does import a little gold on a net basis, as it consumes slightly more gold than it produces.