China’s Gold Reserves Remain Unchanged for Fifth Consecutive Month in September, According to Reuters

SHANGHAI (Reuters) – China’s central bank has refrained from increasing its gold reserves for the fifth consecutive month as of September, according to official data released on Monday. This decision has been primarily influenced by a notable increase in gold prices.

As of the end of last month, China’s gold holdings totaled 72.8 million troy ounces. The overall value of these reserves, however, increased to $191.47 billion, up from $182.98 billion at the end of August.

Gold prices have surged approximately 28% this year, setting the stage for the largest annual gain in 14 years. This rise is supported by the onset of interest rate cuts by the U.S. Federal Reserve, ongoing geopolitical tensions, and strong demand from central banks.

While global central banks, which actively engaged in gold purchases throughout 2022-2023, are expected to reduce their buying in 2024 compared to 2023, they are anticipated to maintain purchases above the levels seen before 2022, according to a report from the World Gold Council. This slowdown is partly attributed to the pause in acquisitions by the People’s Bank of China (PBOC), which had previously purchased gold for 18 consecutive months until May.

The PBOC was the largest official buyer of gold in 2023, and its halt in buying has dampened demand among Chinese investors in recent months. Nitesh Shah, a commodity strategist at WisdomTree, noted, "With higher gold prices, the PBOC continues to pause new purchases. We believe the central bank would prefer to acquire more gold but is waiting for a more favorable entry point."

He added, "However, with global interest rates falling and geopolitical tensions escalating, it seems they may have to wait a while for a price dip. Given our forecast for prices to exceed $3,000 per ounce in the coming year, the central bank might consider building its positions sooner rather than later."