Feb 12, 2019 (China Knowledge) - China has now joined in on a global central bank gold rush over the last two months to increase its official gold reserves as its foreign exchange reserves start to stabilize.
China’s gold reserves increased from 59.56 million ounces as of the end of December last year to 59.94 million ounces at the end of January this year, making for a second straight month of increase. Similarly, the country’s foreign exchange reserves also increased by USD 15.2 billion due to an appreciation in its non-dollar assets.
The recent gold purchase by China comes as many central banks are adding to their reserves of gold due to geopolitical risks, the US-China trade war and an aversion to stock markets which makes gold a stronger “safe haven hedge”.
In addition, China’s purchase of the precious metal may signify a change in its attitude towards gold as it looks to diversify its reserves away from the US dollar.
Previously, China’s official gold reserves had remained unchanged for 26 months at 59.24 million ounces from October 2016 to November 2018 due to a reluctance to buy gold, viewing the gold market as too small for it to significantly diversify its USD 3 trillion worth of foreign reserves.
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