China Continues To Buy More Gold As it Sells Other Foreign Reserves
China’s central bank continues to see the value of diversifying into gold as it continues to purchase the precious metal on a monthly basis in the midst of falling total reserves.
According to media reports, the People’s Bank of China (PBOC) added 580,000 ounces of gold to its official reserves last month; the bank now hold a total of 57.18 million ounces of gold, an increase of 0.9% from December.
The news of China’s latest gold purchases follows more data from the PBOC, showing total foreign reserves fell $99.5 billion to $3.23 trillion in January, the lowest level since May 2012. It was also the second biggest decline in reserves, just behind December’s considerable $108 billion decline.
According to some analysts and economists, China has been busy selling some of its foreign reserves and buying the yuan to prop up its weakening currency and fragile stock market.
Jeffrey Nichols, senior economic advisor at Rosland Capital and managing director at American Precious Metals Advisors, said that he is not surprised to see China buying more gold while it sells its other reserves like U.S. dollars and U.S. Treasuries.
Nichols said that the central bank’s plan to buy gold is part of its plan to make the yuan a more international and tradeable currency. Along with trying to stabilize its economy, the central bank is also diversifying its reserves away from the U.S. dollar, he said.
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