Economy

China's Gold-Buying Spree Tops 100 Tons During Trade War

China's Gold-Buying Spree Tops 100 Tons During Trade War

China's gold reserves rose by 5.9 tons in September, bringing the total added since December 2018 to over 100 tons, Bloomberg reported, citing the People's Bank of China. The value of China's gold holdings increased to $95.45 billion at the end of August. Prices firmed 0.5% last week on concerns of slowing global growth. Central banks have been major buyers too, especially in emerging markets.

"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 OCBC Bank. "As China becomes a superpower in its own right, I expect more gold-buying".

Despite high-profile negotiations being set to continue in Washington this week, Chinese officials have indicated their increasing reluctance to agree to a broad deal.

Gold prices rose above $1,500 an ounce again on Tuesday as talks on avoiding a disorderly Brexit came perilously close to breaking down, while more gloomy data from the USA bolstered the likelihood of another interest rate cut at the end of the month from the Federal Reserve.

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Spot gold rose 0.7% to $1,503.34 per ounce as of 1114 GMT. Prior to that, the yellow metal will be at an important date with the release of the minutes of the Fed's monetary policy meeting last month to see the central bank's expectations on the future of United States interest rate cuts. The price of gold fell to the $1488 level after opening the week's trading around the $1508 resistance, and stable around the $1493 level in early Tuesday trading. While prices fell 3.2% in September, they are still up almost 18% 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. In the first six months, central banks worldwide picked up 374.1 tons, helping push total gold demand to a three-year high, according to the World Gold Council.

The yellow metal, gold, is relatively flat at the start of this week with both Australia and China out on holidays.

While a 10th straight month of accumulation marks a steady buying pattern for the PBOC, China has in the past gone for long periods without disclosing moves in gold holdings.


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