(Kitco News) – China’s central bank slowed its gold purchases at the start of the year; however, it is on pace to match and potentially exceed its last shopping spree nearly eight years ago.
Wednesday, Krishan Gopaul, market analyst at the World Gold Council, said in a social media post that the People’s Bank of China bought 10 tonnes of gold in January.
Gopaul noted that this is the 15th consecutive month China has increased its official gold reserves; however, purchases are half the average since the central bank started its buying spree in November 2022.
“Total gold holdings now stand at 2,245t, nearly 300t higher than at the end of October 2022,” said Gopaul in the post.
Although the PBOC’s purchases have slowed in the last three months, the central bank is on the cusp of matching its previous gold binge. Between June 2015 and October 2016, China bought 184 tonnes of gold, only skipping one month during that 16-month period.
Looking ahead, analysts expect that China will continue to increase its gold reserves. Even after 15 months of straight buying, China’s gold reserves account for roughly 4% of total reserves, well below reserves held by developed central banks.
But it’s not just China’s official reserves driving gold demand. In a recent interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that the PBOC is setting the trend and Chinese citizens are following it.
Ahead of the Chinese New Year, China has seen an insatiable demand for gold as withdrawals from the Shanghai Gold Exchange in January hit their highest level since July 2015 and were the second-highest on record.
Milling-Stanley said that it’s not surprising the central bank and consumers are increasing their gold holdings since it is an important safe-haven asset as the economy continues to struggle.
“Gold offers protection plus performance,” he said. “Gold will always offer you protection because gold historically has always reduced the volatility in a properly balanced portfolio. And over time, gold will also offer you performance, helping to enhance your returns.”
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