China c.bank halts gold purchases for fourth consecutive month

People’s Bank of China (PBC) continued its pause in gold purchases for the fourth consecutive month in August, according to official data released on Saturday.

Despite rising gold prices and strong demand from other central banks, PBC maintained its gold reserves at 72.8 million fine troy ounces at the end of last month.

The value of China’s gold reserves increased to $182.98 billion in August from $176.64 billion in July, reflecting the rise in gold prices. The global price of gold has surged by 21% this year, driven by expectations of lower interest rates in the United States and increased demand for safe-haven assets amid geopolitical and economic uncertainty.

Prior to the pause, the PBC had been a major buyer of gold for 18 consecutive months. Analysts believe that the central bank’s decision to halt purchases is likely motivated by political factors, such as reducing dependence on the U.S. dollar as a reserve asset, rather than economic considerations.

Despite the current pause, Carsten Menke, an analyst at Julius Baer, expects the PBC to resume gold purchases in the future, despite high prices driven by political, rather than economical, motivations, such as its desire to be less reliant on the US dollar as a reserve asset.

Attribution: Reuters