China’s Central Bank Adds Gold to Reserves for Third Month
China’s central bank added gold to its reserves in January for a third month, official data by the People’s Bank of China (PBOC) showed on Friday (Feb 7).
Gold Reserves Increase
China’s gold reserves were 73.45 million fine troy ounces at the end of January, versus 73.29 million troy ounces a month earlier.
Value of Gold Reserves Rises
The value of China’s gold reserves rose to US$206.53 billion at the end of last month from US$191.34 billion at the end of December.
Gold Market Uncertainty
Gold has reached an all-time high, breaking multiple records so far this year, largely due to the uncertainty surrounding US President Donald Trump’s tariff policies, which have amplified concerns about global economic growth and inflationary pressures.
Central Bank’s Gold Purchases
“I think it indicates that they feel that the trade war has got legs to run and that they’re concerned about how that might play out,” an independent metals analyst Ross Norman based in London said.
Trade War and Gold Demand
The US imposed an additional 10 per cent tariff on Chinese imports that went into effect on Tuesday, and was met with a package of retaliatory measures from China.
PBOC’s Gold Purchases
In May 2024, PBOC put a halt to its 18-month-long gold purchasing spree, a move that had significantly impacted Chinese investor demand. However, in November, the central bank resumed its gold buying.
Global Central Banks’ Gold Demand
Global central banks, a major source of gold demand, bought more than 1,000 tonnes of the metal for the third year in a row in 2024 and are expected to remain active buyers in 2025 due to geopolitical and macroeconomic uncertainty, according to the World Gold Council.
Conclusion
China’s central bank has continued to add gold to its reserves, indicating its concerns about the ongoing trade war and its impact on the global economy. As global central banks remain active buyers of gold, the demand for the metal is expected to remain strong in the coming year.
FAQs
Q: Why did China’s central bank add gold to its reserves?
A: China’s central bank added gold to its reserves as a precautionary measure due to the uncertainty surrounding the trade war and its potential impact on the global economy.
Q: What is the value of China’s gold reserves?
A: The value of China’s gold reserves rose to US$206.53 billion at the end of January from US$191.34 billion at the end of December.
Q: Why are global central banks buying gold?
A: Global central banks are buying gold due to geopolitical and macroeconomic uncertainty, and to diversify their foreign exchange reserves.
Q: Will China continue to add gold to its reserves?
A: It is likely that China’s central bank will continue to add gold to its reserves in the coming months, given the ongoing trade war and its potential impact on the global economy.
