China Is on A Big Gold-Buying Spree
The comments below are an edited and abridged synopsis of an article by Ranjeetha Pakiam
China’s on a bullion-buying spree; it expanded its gold reserves for a fourth straight month, adding to optimism that central banks around the world will continue to build up holdings.
The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million in February. In tonnage terms, March’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.
China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is made in trade negotiations with the US. Data from the PBOC show that the country has resumed adding gold to its reserves at a steady pace, as in the period from mid-2015 to October 2016, when it boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.
Last year’s bullion buying by emerging market central banks was the most robust in a long time, as countries diversified reserves. Citigroup Inc. is positive on gold, targeting $1,400 by year-end.
Spot gold fell in March, even after the Fed said it would pause rate hikes. The longer-term outlook is more bullish, as central bank demand should help support prices. Goldman Sachs expects a rally to $1,450 an ounce over 12 months.
Governments worldwide added 651.5 tons of bullion in 2018, the 2nd-highest total on record. Russia has quadrupled its reserves within a decade amid Putin’s quest to break the country’s reliance on the dollar, and central bank holdings rose one million ounces in February, the most since November.
