China is expected to keep adding to its gold reserves as central banks in emerging markets turn to the precious metal to diversify their reserve assets, the World Gold Council said.
“We expect central banks, including China’s, to continue increasing gold holdings, though the pace may vary,” Joe Cavatoni, the council’s senior market strategist and head of public policy, said this week.
China’s gold reserves stood at 74.64 million troy ounces at the end of last month, up 260,000 troy ounces from March, according to the People’s Bank of China, marking the 18th straight month of increases. By comparison, the US holds 261.48 million troy ounces, the world’s largest gold reserve, which has remained unchanged in recent quarters, according to the US Treasury and US Federal Reserve.
Gold demand was being supported by structural concerns over rising debt levels in developed economies and the continued erosion of fiat currencies’ purchasing power, Cavatoni said on Wednesday. Turkey offered one example, he added, as the country was tapping its gold reserves to help manage its current-account deficit and support the value of its currency.
Chinese retail and institutional investors have also driven strong global demand for gold exchange-traded funds (ETFs) this year.
China led global gold ETF inflows in the first four months of the year, attracting about US$9 billion, more than twice the US$3.6 billion recorded by second-placed India. Switzerland and the United Kingdom followed, each drawing inflows of US$1.9 billion, while the United States recorded outflows of US$1.3 billion.
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