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China's central bank added gold to its reserves in February for the third month in a row added. Gold holdings rose to 60.26 million troy ounces in February, an increase of 320,000 troy ounces. This is a purchase of 9.95 metric tons, increasing the total inventory to 1,874.34 metric tons. In January, the central bank added 380,000 troy ounces to its reserves, converted Nearly 12 metric tons.
China's central bank has put the gold reserve for $79.5 billion on its balance sheet, meaning it valued the precious metal at a gold price of $1,319 per troy ounce. Last month, it used a gold rate of $1,323 per troy ounce, from which we can deduce that it revalues the precious metal at the market price on a monthly basis.
China announced its first gold purchase since October 2016 in December last year. Why the central bank has become active in the gold market again is difficult to say. It is also not clear whether the trade conflict with the United States plays a role in the central bank's policy. If we look at the longer term, we see that China has been expanding its gold reserves for much longer. For 2015, these figures were not transmitted to the IMF on a monthly basis, so the graph below shows an erratic trend.
Since the turn of the century, China has quadrupled its gold reserves to more than 1,850 tons. In the same period, only Russia added more bullion to its reserves. Both countries had limited gold reserves at the beginning of the century, especially compared to most developed economies. Meanwhile, the two countries are in fifth and sixth place in the ranking of countries with the largest gold reserves.
Gold is seen by central banks as a safe haven because it has no counterparty risk. Over the past year, central banks have bought a Record quantity of the precious metal. With an increase in protectionism and looming trade problems, the precious metal beckons as a safe reserve.
Central banks of China and Russia are largest buyers of gold
