China Has Added Nearly 100 Tons of Gold to Its Reserves





(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here.

China has added almost 100 tons of gold to its reserves since it resumed buying in December, with the consistent run of accumulation coming amid a rally in prices and the drag of the trade war with Washington.

The People's Bank of China raised bullion holdings to 62.45 million ounces in August from 62.26 million a month earlier, according to data on its website at the weekend. In tonnage terms, August's inflow was 5.91 tons, following the addition of about 94 tons in the previous eight months.

Bullion is near a six-year high as central banks including the Federal Reserve cut interest rates as signs of a slowdown mount amid the U.S.-China trade war. Central-bank purchases have been another key support for prices as authorities from China to Russia accumulate significant quantities of bullion to help diversify their reserves. That buying spree likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd.

Trade war restrictions, in the case of China, or sanctions, as with Russia, give "an incentive for these central banks to diversify," John Sharma, an economist at National Australia Bank Ltd., said in an email. "Also, with increasing political and economic uncertainty prevailing, gold provides an ideal hedge, and will therefore be sought after by central banks globally."

China has previously gone long periods without revealing increases in gold holdings. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, it was the first update in six years.

Spot gold rose 0.2% to $1,510.27 an ounce on Monday. Prices, which capped a fourth straight monthly gains in August, have risen 18% this year. Goldman Sachs Group Inc. and BNP Paribas SA are among banks that expect the metal to challenge $1,600 an ounce within the coming months.

(Adds comment in fourth paragraph; price in sixth paragraph.)

--With assistance from Emma Dong.

To contact the reporter on this story: Ranjeetha Pakiam in Singapore at rpakiam@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jake Lloyd-Smith, Keith Gosman

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

COMMENTS

More Related News

India
India's Reliance Communications' Unit Files for Bankruptcy

A unit of Reliance Communications Ltd., Anil Ambani's distressed telecom firm, has filed for bankruptcy protection. GCX Ltd., which owns the world's largest private undersea cable system, is the latest company owned by the tycoon to stumble. The former billionaire's Reliance Communications itself fell back into bankruptcy earlier this year.

China
China's slowdown deepens in August; industrial output growth falls to 17-1/2 year low

Retail sales and investment gauges also worsened, data on Monday showed, reinforcing views that China is likely to cut some of its key interest rates this week for the first time in over three years to prevent a sharper slump in activity. Industrial output growth unexpectedly weakened to 4.4% in August from the same period a year earlier, the slowest pace since February 2002 and receding from 4.8% in July. In particular, the value of delivered industrial exports fell 4.3% on-year, the first monthly decline since at least two years, Reuters records showed, highlighting the growing toll on Chinese manufacturers from the escalating Sino-U.S. trade war.

The Oil Market
The Oil Market's Reaction to Saudi Arabian Attack in Five Charts

It surpasses the loss of Kuwaiti and Iraqi supply during the Gulf War in August 1990, and the hit to Iranian output in 1979 from the Islamic Revolution, according to the International Energy Agency. The price gap between Brent for delivery this November and December 2020 doubled from $3.57 a barrel at the close of trading Friday to more than $7 on Monday. Calls on West Texas Intermediate crude futures are pricier than puts for the first time since 2018.

U.S. Stock Index Futures Slide After Oil Jumps on Drone Attack
U.S. Stock Index Futures Slide After Oil Jumps on Drone Attack

S&P 500 Index futures expiring in December dropped as much as 0.8% as of 9:25 a.m. in Singapore. Brent crude soared as much as 19.5% and West Texas Intermediate added 15.5% after the news of the attack on the world's largest crude exporter. The Saudi Arabia attacks will likely hurt Asian stock markets today with the S&P e-mini futures already lower, Jeffrey Halley, a market analyst at Oanda Asia Pacific Pte, wrote in an email.

Oil Soars, Yen Gains After Saudi Oil Field Attacks: Markets Wrap
Oil Soars, Yen Gains After Saudi Oil Field Attacks: Markets Wrap

(Bloomberg) -- Oil surged along with the yen and Treasury futures after a strike on the heart of Saudi Arabia's oil production increased geopolitical risk concern. U.S. equity futures declined, while shares in Asia opened flat.Brent crude soared 13% and West Texas Intermediate added 12%. News of the

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.