China gold purchases top 100 tons amid trade war

Marco Green
October 8, 2019

China's gold reserves rose for the 10th straight month in September to 62.64 million ounces, central bank data showed.

This puts China's gold reserves at around US$93 billion (S$128.5 billion).

September's increase of 5.9 mt by the People's Bank of China follows the addition of 99.8 mt through August.

"Gold ETFs (exchange-traded fund) are close to the highest in years, so there definitely is demand for gold because of trade tensions and the slowdown in general in global growth rates", said SP Angel analyst Sergey Raevskiy. "It will take a strong catalyst to bring gold out of this channel", Yan said, adding that quantitative easing by the U.S. Fed, European Central Bank and Bank of Japan could be a major factor.

"Given strained relations with the US, China needs a hedge against its large holdings of the dollar, and gold serves that function", said Howie Lee, an economist at Singapore-based Oversea-Chinese Banking Corp. The US yesterday added 28 Chinese organizations to its blacklist - blocking these companies from buying US goods - over concerns that China is violating the human rights of Muslim minorities in Xinjiang.

The rise in bullion investments is occurring against the backdrop of a lukewarm trade war that has seen the U.S. and China exchange multiple rounds of mutual tariffs on imports. Official data also showed that China's foreign exchange reserves came in at 3.0924 trillion USA dollars at the end of September, increasing by 19.7 billion US dollars, or 0.6 percent from the beginning of 2019.

December Comex gold edges lower, -0.3% to $1,509/oz. While prices fell 3.2 per cent in September, they are still up 17 per cent this year.

More specifically, per data released by the Central Bank of Russian Federation in September, Moscow augmented its stockpile of gold by more than $7.5 billion in one month.

Russian Federation and China have been consistently stockpiling gold bullion in recent years to shift their growing worldwide reserves away from the United States dollar. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, that was the first update in six years.

Other reports by Click Lancashire

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