China Has Increased Gold Bullion Holdings In September
$GLD
China increased its Gold holdings by nearly 1% in September even as total foreign exchange reserves dipped, central bank data showed on Friday.
Gold reserves rose by 480,000 fine troy ounces, or 14.9 tonnes, to 54.93-M ounces, or 1,708.5 tonnes at the end of September, the People’s Bank of China (PBOC) said.
The central bank added 16.2 tonnes in August and about 19 tonnes in July.
PBOC’s buying has been consistent, and continues to be. It is clear that they consider Gold to be an important part of their holdings. So it will not surprise if they continue to add to reserves.
An increase in the gold price in October is unlikely to have deterred the PBOC from buying more, he said.
The rise in China’s Gold holdings comes at a time when its total Forex reserves are falling as the central bank steps up intervention to stabilize the RMB Yuan.
Its foreign exchange reserves, the world’s largest, dropped $43.3-B to $3.514-T in September, data showed earlier this month.
China is the world’s 6th largest official sector Gold holder after the United States, Germany, the International Monetary Fund, Italy and France.
Gold reserves still make up only 1.7% of China’s total reserves, according to the calculations, a factor the market believes will drive the PBOC to continue buying.
The United States, the top holder of Gold with over 8,000 tonnes of Bullion, has 73% of its total foreign reserves in Gold, according to the World Gold Council (WGC).
China should increase its Gold holdings to around 5% of its total reserves to help diversify currency risks, a WGC official said this year. China previously considered its Gold holdings a state secret and did not report its holdings on a monthly basis to the International Monetary Fund (IMF) like most other countries.
It began updating its reserve figures on a monthly basis in June, in a bid to increase transparency as Beijing campaigns to include the RMB Yuan in the IMF’s SDR (special drawing rights basket).
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Paul Ebeling
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