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China announces jump in gold reserves after more than 3 years

7th December 2022

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China reported an increase in its gold reserves for the first time in more than three years, potentially providing a pillar of support for prices.

The People’s Bank of China raised holdings to 63.67-million troy ounces in at end-November from 62.64-million at end-October, according to data on its website on Wednesday. In tonnage terms, last month’s inflow was about 32 tons, compared with a cumulative 106 tons that were reported over the 10 months through September 2019.

Bullion prices gained more than 8% in November after falling for seven months straight on signs the Federal Reserve could become less hawkish with its monetary policy. Aggressive rate hikes to curb inflation have weighed on bullion for most of this year, but bets on China’s reopening as well as expectations of a Fed downshift have driven the dollar lower and supported the metal.

Central banks continued to accumulate gold, with purchases estimated at a record of nearly 400 tons last quarter, the World Gold Council said in its latest demand report. That’s well above the previous record of 241 tons in the third quarter of 2018. Only about a quarter of the bullion bought by central banks went to publicly identified institutions, stoking speculation about mystery buyers.

China has previously gone long periods without disclosing moves in its gold holdings. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, it was the first update in six years. It took another breather from the end of October 2016 and resumed reporting purchases in December 2018.

Edited by Bloomberg

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