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China adds over 100 tons of gold to its coffers this year amid ongoing trade war with U.S.

The People’s Bank of China raised bullion reserves to 62.64 million ounces (1,957 tons) last month from 62.45 million (1,951 tons) in August, bringing this year’s gold haul to over 100 tons.

Bullion hit the highest level in more than six years in September as slower growth, the trade war with the US, and rate cuts encouraged investor demand.

Official purchases will likely continue as protectionist policies and geopolitical concerns add to demand, said Suki Cooper, precious metals analyst at Standard Chartered Bank.

“Given strained relations with the US, China needs a hedge against its large holdings of the dollar, and gold serves that function,” Howie Lee, an economist at Singapore-based Oversea-Chinese Banking, told Bloomberg. “As China becomes a superpower in its own right, I expect more gold-buying.”

The bullion build-up coincides with a trade war with the US and a marked slowdown in growth at home. High-level trade talks are set to resume in Washington this week. US President Donald Trump said he was confident of reaching a deal, while Chinese officials are signaling their reluctance to agree to a broad trade deal, according to media reports.

Trade tensions and market uncertainty have set the stage for a further boost in gold purchases by global central banks. 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. Along with China, Russia has been another large buyer of the yellow metal, adding substantial quantities of bullion.

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