China buys 32 tonnes of gold in November, first increase in reserves since 2019
Editor’s note: The story was updated to include additional commentary and market analysis from the World Gold Council
(Kitco News) – China has confirmed what many commodity analysts have long suspected was happening for most of this year: it is loading up. gold again.
Earlier on Wednesday, the People’s Bank of China announced that it had bought 32 tonnes gold in november According to reports, it was bought by the central bank gold when prices were around $1,650 an ounce.
In a comment on Twitter, Krishan Gopaul, senior market analyst for Europe, the Middle East and Asia at the World Gold Council, noted that this is the first time the central bank has announced a change in gold reserves since September 2019.
Gopaul added that China’s gold reserves now stand at 1,980 tons.
While China’s central bank’s announcement came up empty, it’s not surprising, as many analysts have speculated that the nation has been building gold reserves all year.
Last month the World Gold Council said central banks bought 400 tonnes of gold in the third quarter. WGC noted that this is the highest demand quarter for this sector, according to their records.
However, the WGC also noted that much of this gold was purchased anonymously.
“Not all official organizations report them publicly gold stakes or can do so with delay,” the WGC said in its report last month.
In an interview with Kitco News, Juan Carlos Artigas, global head of research at the World Gold Council, said China’s latest. gold is consistent with pre-purchase activity.
He added that he could not speculate on why China announced its latest purchases.
“This is a continuation of China’s trend. The central bank continues to use gold to diversify reserves,” he said. “I don’t think this is an unusual activity for China.”
Beyond the central bank’s one-off purchase, Artigas said this is a small snapshot of a much larger trend. He noted that central banks have been net buyers of gold for the past 13 consecutive years.
“What we have seen and what we expect to see is that central banks continue to diversify their reserves and hedge against risk with gold,” he said.
Nicky Shiels, head of metals strategy at MKS PAMP, said the timing of the announcement could be more significant than the amount bought.
In a comment on Twitter, China said it had updated its reserves, following an increase in the debate over gold oil trading in the market.
“As deglobalization accelerates, non-G-10 nations are expected to ‘re-commodify’ and increase gold holdings; the de-dollarization narrative is gaining traction,” he said.
*CHINA’S GOLD RESERVES RISE FOR THE FIRST TIME IN OVER THREE YEARS
That >1mn oz was bought on 22nd Nov BUT more importantly they chose to disclose this now… The market is increasingly debating the gold oil trade. As deglobalization accelerates, the non-G-10
— Nicky Shiels (@nixsa84) December 7, 2022
Marc Chandler, managing director of Bannock Global Forex, said in a comment to Kitco News that China’s buying is a decline compared to overall reserves.
“It seems like a lot, but if it’s about diversification, it’s small,” he said. “I think the role of the dollar as a reserve currency is safe and the diversification of the dollar gold it is modest and irrelevant to the dollar and probably to the gold market itself.’
Note: The opinions expressed in this article are those of the author and may not necessarily reflect his own Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee this accuracy. This article is for informational purposes only. It is not a request to exchange commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage resulting from the use of this publication.
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