China’s Persistent Gold Accumulation: A Seven-Month Surge in Holdings
The comments below are an edited and abridged synopsis of an article by GoldTelegraph.com
China has continued to expand its gold reserves for a seventh consecutive month, reinforcing the sustained global demand for the precious metal among central banks.
The nation’s gold holdings saw an approximately 16-ton increase in May.
This brings the total stockpile to roughly 2,092 tons, following an addition of 144 tons from November through the previous month.
In the wake of escalating geopolitical uncertainty and persistent global inflation, central banks worldwide set a record in gold purchases last year. Despite experiencing a significant drop in the first quarter of this year, market analysts expect the strong buying trend to persist.
A recent survey showed that around a quarter of global central banks plan to bolster their holdings over the coming year. This comes amid mounting skepticism regarding the future role of the US dollar.
The collective purchases of central banks accounted for nearly one-fourth of global gold demand last year.
Ongoing demand is expected to provide support for the gold price, which hit an all-time high in May. In the first quarter of the year, only Singapore outpaced China in terms of gold purchases.
China’s intensified gold acquisition, which commenced in November, is the first since a 10-month rally that concluded in September 2019. The previous significant inflow ended in late 2016 (though many question the official data, suggesting China’s gold holdings are considerably larger).
In the meantime, the People’s Bank of China reported a decrease in the country’s end-May foreign currency reserves, which dropped from $3.20 trillion to $3.18 trillion compared to the preceding month.