China’s Central Bank Buys Another 14 Tons of Gold … Bullion Falls To 3 Month Low

– PBOC declared gold reserves now about 55.38 million troy ounces or 1,722.5 metric tonnes

– Central bank gold rose to $63.26 billion by end-month – less than 2% of $3.53 trillion FX reserves

– China disclosed on July 17th that its gold holdings had surged 57% since 2009

– China officially owns around 1,720 tonnes of gold  –  true total figure likely much larger

– China’s total gold holdings likely higher as also owns gold in CIC

China’s central bank likely added another 14 tonnes of gold to its reserves in October as the PBOC continues to allocate to gold bullion as part of a plan to diversify its massive $3.53 trillion in foreign-exchange reserves and position the yuan as a global trading and reserve currency.

Gold prices rose 2.5 percent in October but fell nearly 5% last week on continuing speculation of a possible Fed interest rate rise. Despite, much poor U.S. economic data in recent weeks, the positive jobs number on Friday saw safe haven gold fall.

Based on the London Bullion Market Association (LBMA) afternoon gold price on the last trading session of October, China’s reserves likely totalled 55.378 million troy ounces or 1,722.5 tonnes at the end of last month. That would be an increase of about 14 tonnes from September. The PBOC reveals the dollar value of its gold reserves early in the month, before revealing the volume numbers later on.

China’s gold reserves rose by about 15 tons in September, 16 tons in August and the highest monthly purchase was nearly 19 tonnes in July.

China disclosed on July 17th that its gold holdings had surged 57% since 2009. China has overtaken Russia to own the world’s fifth-largest national gold reserves. China is the world’s sixth largest official sector gold holder after the United States, Germany, the International Monetary Fund (IMF), Italy and France.

The United States, believed to be the top holder of gold with more than 8,000 tonnes of bullion, has 73 percent of its total foreign reserves in gold, according to the World Gold Council (WGC). These reserves have not been audited in decades leading to some concerns about the exact amount of unencumbered U.S. gold reserves.

The U.S. and Germany’s gold reserves are believed to be 74 percent and 68 percent of total fx reserves respectively.

This means that the PBOC reserve diversification into gold is likely to continue and indeed could accelerate should relations with the U.S. further deteriorate or in the event of a Chinese financial crisis or another global financial crisis. Both of which we see as likely.

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IMPORTANT NEWS

China’s gold reserves likely rose by 14 tonnes in October – Reuters
China Probably Raised Gold Hoard Again in October Adding 14 Tons – Bloomberg
Gold Plunges Most in a Year This Week on `Darn Strong’ Jobs Data – Bloomberg
Dollar Surges, Bonds Drop on Rate Speculation; Banks Rally – Bloomberg
Gold sinks 7 sessions in a row, loses 4.7% on the week – MarketWatch

IMPORTANT ANALYSIS