China reports a second month of increased gold reserves

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Published : February 12th, 2019
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Category : Central Banks

By Zhou Xin and Karen Yeung
South China Morning Post, Hong Kong
Monday, February 11, 2019

China has joined a global central bank gold rush in the last two months by increasing its official gold reserves, even though the purchase remains modest compared to the volume of the mainland's foreign exchange reserves, according to data released by the People's Bank of China today.

The country's gold reserves rose slightly to 59.94 million ounces at the end of January from 59.56 million ounces at the end of December 2018, marking a second straight month of increase.

The latest gold purchase by the world's second-largest economy came at a time when global central banks are hoarding the precious metal. According to the World Gold Council, the amount of gold bought by central banks in 2018 reached the highest annual volume on record since 1971, the year that former US President Nixon Richard scrapped the dollar's peg to bullion.

China, the world's largest foreign exchange reserve holder, has been reluctant in diversifying its US$3 trillion foreign exchanges into gold. Official gold reserves remained unchanged for 26 months at 59.24 million ounces from October 2016 to November 2018.

Yi Gang, the current central bank governor, said in 2013 when he headed the State Administration of Foreign Exchange that Beijing was unable to diversify significantly into gold because the gold market is too small for China's US$3 trillion foreign reserves.

But things may start to change -- though it remains to be seen whether the modest gold purchases in the last two months represented a fundamental shift in China’s attitude towards the precious metal, analysts said.

... For the remainder of the report:

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