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The central bank's announcement suggests Chinese gold investors will start looking abroad more aggressively. China is the world's largest gold producer and the second largest gold consumer after India.
According to estimates from the China Gold Association, this year's gold output may exceed last year's record high of 313 tons. Gold demand from China's largest sectors, jewellery and investment, reached a combined total of more than 420 tons in 2009.
The World Gold Council forecasts the country's gold demand will double over the next decade. China's gold reserve lists was the fifth largest in the world last year, at over 1,000 tons.