Gold rises 1 percent on China reserve news

Gold rose 1 percent to a three-week high on Friday after China said it had been buying the precious metal for its reserves, confirming speculation it has been bulking up its reservesand raising hopes of more purchases to diversify its massive foreign exchange holdings.

The government has 1,054 tonnes of gold in its reserves, up 454 tonnes tonnes since 2003, Hu Xiaolian, head of the State Administration of Foreign Exchange(SAFE), said. This makes it the fifth biggest country holder.

Spot gold rose to $910.90 per ounce b 0528 GMT, up 1 percent from New York''s notional close of $902.00. It has risen 5 percent so far this week, putting it on track for the biggest weekly gain for two months.

Prices have also been by physical demand from India, the world''s largestconsumer, ahead of the Akshaya Tritya festival on April 27, an auspicious time for gold buying.

Low interest rates globall are helping to bolster financial strength for banks and securities firms, but consumer demand was still slack, limiting rises in stocks and keeping risk aversion alive, traders said.

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