The People’s Bank of China have recently announced two large purchases of gold to add to the country’s already significant holding for their reserves. China’s central bank have been keen to diversify away from the US dollar in recent years, and the recent purchase takes their official total to 2,010 tonnes.
Following an aggressive buying spree of gold reserves in 2019, the country had been silent since, presumably focused on the Covid pandemic and economic fallout of the country’s strict pandemic policies. It has now announced two purchases in November and December of last year, adding 32 and 30 tonnes respectively.
This still leaves China as the country with the sixth largest gold reserves, behind Russia, France, Italy, Germany and the US. Doubts have been cast for many years however as to whether the official figures being reported from China match the reality, and that the country likely has far greater reserves.
Analysts believe the 62 tonnes of gold purchased by China could be partly behind the significant rise in gold the past three months. In USD, gold is up more than 11% in in those three months, and although the dollar has suffered a pullback from recent highs and the economic outlook has certainly deteriorated, there have been questions over whether this is enough to have warranted such a rise for the gold price.
Significant central bank purchases would certainly have helped keep gold demand high. Dealing in tonnes, these purchases have the power to move the gold price, and China is not the only country to make purchases in recent months. Q3 2022 was a record quarter for gold reserve purchases, and figures for Q4 are highly anticipated and will likely confirm a decades-high record for gold reserve purchases for the year.