China raises its gold reserves for the sixth month in a row.. Why?

China continues to expand gold purchases as central banks around the world expand their holdings of gold bullion in light of the escalating geopolitical and economic risks.

China added to its gold reserves for the sixth month in a row, to reach 2076 tons, after adding 120 tons over the course of 5 months.

According Bloomberg Network, China continues to expand gold purchases at a time when central banks around the world are expanding their possession of gold bullion in light of the escalating geopolitical and economic risks.

Raising reserves

According to data issued by the National Foreign Exchange Authority, China increased its gold holdings by 8.09 tons last April.

The total stockpile is now approximately 2,076 tons, after the country increased its reserves by 120 tons over the five months to March, Bloomberg reported.

Central banks have bought huge amounts of gold over the past year to diversify their assets, as well as to protect their reserves from the impact of a weak dollar and rampant inflation, according to the American Network.

While flows were moderate in the first quarter of 2023, gold quantities remained at historically high levels, according to the World Gold Council. Singapore, China and Turkey were among the largest buyers.

Resort to yellow metal

According to Bloomberg, the voracious appetite for buying gold helped prices reach near-record levels at a time when the markets are witnessing concern about the slowing US economy and signs of continuing credit stress.

The American Network added that the geopolitical risks emanating from the increasingly fragile Sino-American relations also enhance the attractiveness of gold as a safe haven.

Chinese buying spree

The latest Chinese buying spree, which began last November, was the first since a 10-month streak that ended in September 2019, according to Bloomberg. Before that, the last wave of inflows ended in late 2016.

At the same time, the data showed that foreign currency reserves in China rose by the end of last April to $3.2048 trillion, from $20.9 billion in the previous month.

The Foreign Exchange Regulatory Authority said in a statement that the rise in foreign exchange reserves was a result of the decline in the value of the US dollar and the rise in global financial asset prices, adding that China's economic recovery would help maintain the stability of reserves.