China has increased its gold reserves to 59.56 million ounces after refraining from adding to its holdings for two years.
China has added to its gold reserves for the first time in over two years, with the People’s Bank of China increasing its holdings to 59.56 million ounces as of the end of December 2018.
That’s up from the previous 59.24 million ounces, an amount that was unchanged since approximately 130,000 ounces were added in October 2016. The increase came during a month that was marked by growing concerns about the impact China’s trade dispute with the US could have on economic growth.
The yellow metal encountered its strongest month in almost two years in December as those concerns caused equities and the US dollar to tumble and sent investors towards precious metals as a safe haven.
Speculation that the US Federal Reserve may halt interest rate hikes for this year has added to gold’s rally into 2019, with assets in bullion-backed exchange-traded funds at a seven-month high.
Touching on China’s recent gold reserves increase, Turner stated, “[t]he reasons could be diversification, a wish to get away from the dollar, but it’s hard to be certain because we just don’t know enough about what their motivations are.”
In the past, the Asian country has spent long periods without revealing any increases to its gold holdings. In 2015, the central bank announced that reserves had jumped 57 percent to 53.3 million ounces; it was the first update in six years.
“I’m always wary of year-end moves, but if they buy again, then it’ll look like they’re on another run of additions, like they did in 2015-2016,” Turner noted.
In addition to China, Poland and Hungary made waves in the market in 2018 when they added to their gold holdings for the first time in several years.
According to an October projection from Metals Focus, central banks were expected to increase their gold purchases last year for the first time in five years as Eastern European and Asian countries looked to diversify their reserves.
As of 2:48 p.m. EST on Tuesday (January 8), gold was down 0.26 percent at US$1,284.90 per ounce.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.