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The Chinese are building gold reserves. They want the Rmb to be a reserve currency alongside of USD and EUR.

It is the old apartment story...the 200 block of apartments is set by the sale price of the last one sold.

As they accumulate more, steadily, the last ounce purchased sets the value of the whole pile. They will tolerate some movement, but they have been accumulating since $700 and a bit lower, so I expect their average is probably $1100. AS price rises and they keep buying for the next 3-4 years or so, just mentally put a price some $500-800 beneath the highest price and that will be the floor.

The Russians have been buying too...and they don't want to have their gold trashed either. Even the US doesn't, they just don't want gold zooming to the rafters and making it obvious that their currencies are worth less, not worthless, so its a managed rise for a long time