Why has China bought so much gold recently? To move further towards non dependence on the US Dollar?

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China’s purchase of gold is not unique: Central banks have been net purchasers of gold for the last 13 consecutive years.

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World Economic Forum

Here’s why so many central banks are buying gold

Nov 10, 2022
Mimansa Verma

Reporter, Quartz

  • Demand for gold has risen by 28% this year, primarily driven by a flight towards safer assets amid soaring inflation, according to a new World Gold Council report.
  • A significant amount of this demand has come from central banks in recent months.
  • Turkey was the biggest gold buyer in the third quarter, followed by Uzbekistan and India.

Central banks globally have accumulated gold reserves this year at a pace never seen since 1967, when the US dollar was still backed by the precious metal.

In the quarter ending September, demand for gold was up 28% year-on-year, reaching 1,181 tons, according to a new World Gold Council (WGC) report. The demand for gold this year has been primarily driven by a flight towards safer assets amid scorching inflation.

Gold is regarded as an effective inflation hedge, although some analysts believe this to be true only over extremely long time horizons stretching over a century or more.

A significant chunk of the demand from central banks arose during the previous quarter, setting a record of nearly 400 tons that lifted central bank net purchases to date to 673 tons.

https://www.weforum.org/agenda/2022/11/central-banks-gold-market-economy-global/

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(Kitco News) – China has confirmed what many commodity analysts have long suspected was happening for most of this year: it is loading up on gold again.

Early Wednesday, the People’s Bank of China reported that it bought 32 tonnes of gold in November. According to reports, the central bank bought gold when prices were around $1,650 an ounce.
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In an interview with Kitco News, Juan Carlos Artigas, global head of research at the World Gold Council, said China’s latest gold purchase is in line with its previous activity.

He added that he couldn’t speculate why China announced its latest purchases.

“This is a continuation of the trend for China. The central bank continues to use gold to diversify their reserves,” he said. “I don’t think this is unusual activity for China.”

Beyond just one central bank purchase, Artigas said that this is a small picture in a much bigger trend. He noted that central banks have been net purchasers of gold for the last 13 consecutive years.

“What we have seen and expect to continue to see is that central banks continue to diversify their reserves and hedge against risk with gold,” he said.
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Marc Chandler, managing director at Bannock Global Forex, said in a comment to Kitco News, that China’s purchase is a drop in the bucket compared to their overall reserves.

“It sounds like a lot, but if the issue is for diversification, it’s minor,” he said. “I think the dollar’s role as a reserve currency is safe and the diversification out of the dollar into gold is modest and inconsequential for the dollar and probably for the gold market itself.”

By Neils Christensen

For Kitco News

https://www.kitco.com/news/2022-12-07/China-buys-32-tonnes-of-gold-in-November-first-increase-in-reserves-since-2019.html

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China thought to be stockpiling gold to cut greenback dependence

Buying of metal is at its fastest pace since the 1960s

MUNEMASA HORIO, Nikkei staff writerNovember 22, 2022 04:48 JST

TOKYO — Central banks are snapping up gold this year, but it is uncertain which ones are behind most of that shopping spree, fueling speculation that China is a big player.

Seeing how Russia has been hit by monetary sanctions by the West, China and some other countries must be hurrying to reduce dependence on the dollar, analysts reckon.

https://asia.nikkei.com/Business/Markets/Commodities/China-thought-to-be-stockpiling-gold-to-cut-greenback-dependence

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