China Accumulates Gold... Holdings Reach 2,068 Tons, 20 Times That of Korea

Increasing Reserves for 5 Months to 2,068 Tons
Global Efforts to Expand Reserves Underway

Amid the soaring price of gold, a representative safe-haven asset, following the Silicon Valley Bank (SVB) crisis in the United States, China's gold reserves have been increasing for five consecutive months. The total reserves are close to 20 times that of South Korea.

On the 7th, Chinese economic media Caixin cited an announcement from the People's Bank of China, the central bank, reporting that as of the end of March, China's gold reserves reached 2,068 tons. This represents a 0.9% increase compared to the previous month, with an additional 120 tons accumulated over the past five months. This amount exceeds the 106 tons accumulated over 10 months from December 2018 to September 2019. The total reserves are nearly 20 times the amount held by the Bank of Korea (104.45 tons).

[Image source=Yonhap News]

As of the 5th (local time), the price of near-month gold futures on the New York Mercantile Exchange closed at $2,035.6 per ounce (approximately 2,684,956.40 KRW). Compared to last November when the price dropped to $1,630 per ounce, this is an increase of nearly 25%. Caixin reported, citing the latest report from the World Gold Council, that "most global central banks, in addition to China, are actively increasing their gold reserves," attributing the reason to "geopolitical uncertainties and high inflation." According to the report, global gold demand last year rose 18% year-on-year to 4,741 tons, with global central banks purchasing 1,136 tons, accounting for about 24% of the annual demand.

Wang Youxin, a researcher at the Bank of China (BOC) International Finance Research Institute, told Caixin that "the increase in gold reserves is likely a decision made after comprehensively considering factors such as safety, profitability, and liquidity of reserve assets," explaining that "gold has higher price stability compared to other financial assets like stocks and bonds, and can also serve some role in foreign payment."

China's foreign exchange reserves are also on the rise. As of the end of March, China's foreign exchange reserves amounted to $3.1839 trillion, an increase of $50.7 billion (1.62%) compared to the previous month. The main reason was the increase in valuation due to the weakening of the US dollar. Researcher Wang added, "Since October last year, the dollar has continued to weaken, and the depreciation pressure on currencies other than the dollar has eased," further explaining, "Interest rate hikes by major central banks have slowed, and concerns about economic recession have increased, causing recent US bond yields to plummet." He continued, "As the yuan exchange rate recovers, Chinese companies and general consumers have incentives for foreign exchange settlements, leading to accumulated foreign currency assets moving to the central bank. At the same time, foreign capital is actively flowing in due to the acceleration of China's economic recovery."

This content was produced with the assistance of AI translation services.