The desire of China to increase its gold reserves could lead to the fact that this year he will oust Russia from a position most active buyer of gold in the world
If Beijing will continue purchasing physical gold at the same pace as in recent months, it could bypass Russia and Kazakhstan, which were the leading buyers in 2018, but in recent years reduced the rate of buying gold, reports “Hvil”.
China is the world’s largest producer of the precious metal, but its own gold reserves amount to at least $ 80 billion. This is only a small part of total foreign reserves, which exceed $ 3 trillion. In comparison with other countries, China gold has a much smaller part of international reserves. For example, in Russia this figure reached 19 percent, while in China it is less than three percent.
In early March, people’s Bank of China announced an increase in its gold reserves of 10 tons in February, while in January and December, this figure was respectively 11.8 and 9.95 tonnes. Thus, the total volume of reserves of physical gold in China is now 1874 tons, or 60,26 million ounces.
Unlike China, Russia has reduced purchases of gold to its lowest monthly level since December 2006. In January 2019, Moscow has acquired, according to multinational financial services company Standard Chartered, only 6.2 tons. As for Kazakhstan, the volume of purchases of gold (about 2.8 tons) in January was also below the average monthly value for last year, which was 4 tons.
In 2018, the Central banks as a whole purchased 651,5 tons of gold, which became, according to the world gold Council, the largest consumer boom in the last fifty years. This surge in activity was led by Russia, Turkey and Kazakhstan. Russia acquired a total of 274 tons of gold, the highest net purchases in history.
These actions, along with steady demand in exchange traded instruments backed by gold, led to the fact that the price on the world market reached in February 2019, the highest level in the last twelve months – 1346 dollars an ounce.
Since the price of gold fell to the level of 1298 dollars per ounce due to stronger equity markets and outflows from exchange-traded instruments, which support gold. However, according to sukie Cooper, analyst at precious metals Finance Corporation Standard Chartered in new York, continuing operations Central banks purchase physical gold can provide a cushion to gold prices this year.