clipped from www.ft.com

Gold prices hit on Monday a fresh record high of almost $1,265 a troy ounce following the revelation that Saudi Arabia, the world’s largest oil exporter, is sitting on more than twice as much gold as previously thought, according to new estimates.

The weakness of the dollar following China’s decision to make the yuan more flexible, gave bullion further momentum, analysts said. A stronger yuan makes the cost of gold for Chinese buyer cheaper, potentially increasing demand. China is the world’s second largest gold consumer, after India. It is also the largest producer.

Analysts said the rise in official gold holdings probably represented an accounting shift rather than fresh purchases. One possibility is that a large fraction of the country’s gold was not considered until now part of the official reserves.

But without an official explanation, analysts were keeping options open. At current prices, the extra gold in Saudi Arabia’s official reserves amounts to $7bn.