China May Have Boosted Gold Reserves 0.9% Last Month, Data Show

  • Country probably added 15 tons based on dollar value of assets
  • Nation increased assets by 19 tons in July, 16 tons in August

China may have further increased central bank gold holdings in September, raising them by about 15 metric tons to 1,709 tons, as it seeks to diversify its foreign exchange reserves.

The value of gold assets was $61.2 billion at the end of last month from $61.8 billion at end-August, data from the People’s Bank of China website released Wednesday show. That works out to about 54.94 million troy ounces or 1,709 tons, based on the London Bullion Market Association afternoon price auction on Sept. 30, Bloomberg calculations show. The hoard was 54.45 million troy ounces a month earlier.

China announced increases of about 19 tons for July and 16 tons for August after disclosing July 17 that holdings had jumped 57 percent since 2009, ending six years of mystery. While China has overtaken Russia to become the country with the fifth-largest stash, it still has only about 1.6 percent of its reserves in gold, compared with 73 percent for the U.S. and 67 percent for Germany, World Gold Council data show.

“Their reserves are still way off what they are in the U.S. or Germany so even at this rate, it will still take a while for them to go near what these super powers have,” Howie Lee, an analyst at Phillip Futures Pte in Singapore, said by phone. “If they want to be on a comparable footing with these countries, I assume that they have to build their reserves to somewhere near that level.”

Monthly Reporting

Global bullion prices fell 1.8 percent in September and declined 5.9 percent in the first nine months as investors expected the U.S. Federal Reserve to increase interest rates for the first time since 2006 amid an economic recovery. Bullion has climbed 3 percent in October after poor payrolls data reduced expectations of a rise. Higher interest rates hurt gold as the metal doesn’t pay interest like bonds.

China’s been reporting the value and tonnage of gold reserves monthly in a shift toward greater transparency as the nation promotes the global role of the yuan and seeks to join the International Monetary Fund’s currency basket. The country joins Russia and Kazakhstan in making monthly increases.

The People’s Bank of China announces the tonnage later in the month. Two calls to the PBOC spokesman’s office in Beijing weren’t answered. Wednesday is the last day of a week-long national holiday in China.

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