CHINA BULKS UP ON GOLD RESERVES FOR A SECOND CONSECUTIVE MONTH / THE FINANCIAL TIMES

China bulks up on gold reserves for a second consecutive month

Central banks hoard the most of the precious metal in almost half a century

Neil Hume


© Reuters


China has added to its gold reserves again.

At the end of January its holdings stood at 59.94m ounces, up from 59.56m a month earlier, according to figures released by the People’s Bank of China on Tuesday.

It marks the second month in a row that China, the world’s biggest consumer and producer of gold, has added to its hoard of the precious metal.

Before its purchase in December, the last time China bought gold was in 2016.

Over the past year, central banks emerged as big buyers of gold, with purchases up almost 75 per cent.

They acquired $27bn worth of bullion — the most in almost half a century — in 2018 as countries including Russia, Turkey and Kazakhstan shifted reserves away from the US dollar.

Analysts reckon 2019 could be another big year for central bank gold purchases.

“We expect elevated geopolitical tensions and less pressure on emerging market currencies to keep gold purchases at 650 tonnes in 2019,” Goldman Sachs said in a recent report.

“Between 2009 and 2015 China has bought on average 100 tonnes of gold per annum. Tensions between the US and China could remain high in the coming years. In the experience of Turkey and Russia, both countries increased their gold purchases following rising tensions with the US.”

Gold was trading at $1,313 on Tuesday, up 7.5 per cent year to date.

News of China’s gold buying came as Matteo Salvini, Italy’s deputy prime minister and leader of the League party, raised the possibility of wresting control of Italy’s sizeable gold reserves away from the country’s central bank.

The Bank of Italy has the third-largest central bank holding of gold reserves in the world after the US and Germany, owning 2,452 tonnes at the end of the third quarter of last year, according to the World Gold Council.