China still holds its gold reserves amid high prices

During April, China continued to increase its gold reserves for the sixth month in a row, in a move confirming that its attempt to improve its precious metal possession, in light of the trading of prices at record levels and the continuation of the atmosphere of the trade war. The alloys held by the Chinese Volksbank increased by about 70,000 ounces over the past month, according to the data released on Wednesday. Over the past six months, the total increase has reached about one million ounces, or about 30 tons. Gold has seen consecutive record highs this year, powered by a wide wave of central banks that seek to diversify their reserves away from the US dollar. This upward momentum, which led to the increase in prices by about 30% this year, contributed to improving investment demand, at a time when the US trade war continued to destabilize financial markets, exacerbating anxiety over US assets and strengthening the demand for secure ports. A Chinese demand for gold The Chinese market is witness to an increasing rise of investors on gold, as trading volumes at the Shanghai Stock Exchange have recorded record levels over the past few weeks. This strong request urged the Chinese Volksbank to award new shares for commercial banks to import more alloys. Besides, the Chinese authorities have strengthened their efforts to support the local economy in preparation for a prospective tour of commercial talks with senior US officials later this week. Within these moves, Wednesday, Beijing lowered the basic interest rate in China, as well as the mandatory reserve rate that lenders should hold, reduced in a step that emphasized the government’s efforts to stimulate economic growth. The central banks bet on gold, central banks have increased their purchases of gold since 2022 by about five times, after freezing Russian assets, according to the Goldman Sachs Group, which has been one of the most important optimists over the high prices of alloys in recent months. Analysts said in a memorandum released in March that this trend is a structural shift in reserve management behavior. We do not expect a reflection of this short -term trend. ‘ In the same context, Goldman Sachs Bank estimated that the Chinese bank maintains only 8% of its gold reserves, which is less than the global average of about 20%, and with much lower than the high shares registered in a number of advanced economies. The bank analysts indicated that if Beijing tries to increase this percentage to 20%, while retaining an average purchase of about 40 tonnes per month, it will be about three years to achieve this goal. The price of Instant Gold reached its last peak in April, exceeding the hindrance of $ 3500 per ounce. Gold has continued to record monthly profits since the beginning of the year, to establish about $ 3387 per ounce recently.