China Adds Most Gold in November in 5 Months as Price Slumps

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  • Country continues to diversify foreign exchange reserves
  • Bullion prices plunged 6.8% in November, most since 2013

China probably increased central bank gold reserves in November by about 21 metric tons, the most in at least five months, as prices had the biggest drop in more than two years.

The value of gold assets was $59.52 billion at the end of last month from $63.26 billion at end-October, according to data on the People’s Bank of China website released Monday. That works out to 56.05 million troy ounces or about 1,743 tons, based on the London Bullion Market Association afternoon price auction on Nov. 30, Bloomberg calculations show. The stash was 55.38 million ounces a month earlier.

China ended six years of secrecy in July over how much gold it’s hoarding as it seeks to spur greater global use of its currency and diversify its $3.44 trillion in foreign-exchange reserves. The International Monetary Fund last week approved the inclusion of the yuan in the fund’s Special Drawing Rights basket, alongside the dollar, euro, pound and yen. The change will take effect Oct. 1, 2016. Bullion prices slumped 6.8 percent in November, the biggest monthly decline since June 2013.

“They are continuing to diversify their foreign reserve holdings,” Ole Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by phone. “They’re thinking long term and they see this as an opportunity to accumulate while the prices have come down.”

China’s gold reserves rose by 14 tons in October, 15 tons in September, 16 tons in August and 19 tons in July. It disclosed on July 17 that holdings had surged 57 percent since 2009. While the country has overtaken Russia to own the world’s fifth-largest hoard, 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.

Russia and Kazakhstan are buying along with China as prices head for a third annual decline on prospects that the U.S. will increase interest rates this month for the first time since 2006. Central banks and other institutions boosted gold purchases to the second-highest level on record in the quarter to September, according to the council.