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China added half a million troy ounces of gold to its reserves in June added, according to the latest figures from the Chinese central bank. This increases the country's total gold reserves to 1,823 metric tons, good for fifth place on the Rankings countries with the largest gold reserves. Over the past twelve months, People's Bank of China has added 165 tonnes to the vault. This makes the world's second largest economy responsible for a large share of all central bank purchases.
At the current gold rate, China's total gold reserves represent a value of more than €77 billion. Relative to the $3.2 trillion in foreign exchange reserves, the precious metal represents a marginal share of 2.3%, but it is still more than a year ago. At that time, the central bank had only 1.6% of its reserves in the yellow metal. China wants to diversify its reserves and has been expanding its gold reserves for years.
China continues to add gold to reserves
A year ago, China opened up about its gold reserves for the first time since 2009. In order to comply with the IMF's accounting rules, the central bank had to announce its gold purchases on a monthly basis. Since then, the world's second-largest economy has added some precious metal to its vault almost every month.
"The fact that China continues to buy gold is a clear signal that there is still distrust of the US dollar. The country wants to be less dependent on the dollar and is therefore exchanging part of its currency reserves for gold. That seems like a logical choice to me, because the Chinese central bank still has little gold compared to Russia and many European countries.", according to Menno Brandsma of Hollandgold.
China values its gold holdings every month according to the current gold price, just like the central bank of Russia. The ECB values the gold of all eurozone member states on a quarterly basis according to the current gold exchange rate. In doing so, the central banks show that gold plays an active role in the management of reserves. This is in contrast to the United States, where the precious metal is still on the books at a historic rate of $42.22 per troy ounce.
