China Increases Gold Reserves: Impact on Global Economy and Gold Prices

China increased its gold reserves for the ninth consecutive month in July, with the central bank continuing to make purchases to support the precious metal's prices. The People's Bank of China's gold holdings increased by 740,000 troy ounces, equivalent to about 23 tons. As a result, the total stock is now 2,137 tonnes. 

Importance for Gold's Price Outlook

These purchases are key to gold's price outlook for this year, according to the World Gold Council, which expects central banks to continue to increase their reserves. Demand for alternatives to the dollar increased after the U.S. sanctions against the Russian reserves due to the Ukrainian invasion. China has taken the lead in central bank purchases and continues to diversify its reserves, which has helped to increase the Gold prices stable despite rising interest rates worldwide.

Strong growth in foreign exchange reserves

In addition to the increase in Gold Reserves China has also seen its total foreign exchange reserves increase to $3.204 trillion in July, an annual increase of 3.2%. This strong growth shows that China is still a major player on the world stage and continues to strengthen its financial position.

Impact on the global economy and global financial markets

The continued rise in China's gold reserves and growing foreign exchange reserves are attracting the attention of the markets and could have an impact on the global economy. Investors and analysts are keeping a close eye on how China continues to manage its reserves and what role gold will play in the country's monetary policy. These developments could also affect the global demand for and price of gold, making the precious metal a permanently important player in global financial markets.

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Source: Bloomberg

Author: Sybilla Gross