China Says Gold Hoard Climbs 1.1% in Data Transparency Push

August 14, 2015

Beijing (Aug 14)  China, the world’s biggest bullion consumer, disclosed that it increased its gold reserves by 1.1 percent in July in a drive for more transparency as it pushes for the yuan’s inclusion in the IMF’s currency basket.

Holdings rose to 53.93 million troy ounces from 53.32 million ounces a month earlier, according to data released on Friday by the central bank. On July 17, the country ended six years of mystery surrounding its hoard, revealing a 57 percent jump in assets since 2009 and overtaking Russia to become the country with the fifth-largest stash.

The nation is seeking to improve data quality, including the monthly release of reserve figures rather than quarterly. The IMF said earlier this month that more work was needed before deciding whether to grant the yuan reserve status. China devalued the currency this week and announced a shift to a more market-driven exchange rate mechanism.

“China’s central bank will continue to buy,” Gnanasekar Thiagarajan, director of Commtrendz Risk Management Services Ltd., said by phone from Mumbai. “The central bank is diversifying its reserves and some amount of bargain hunting has taken place. The PBOC is trying to make the renminbi into an international currency,” he said, referring to the People’s Bank of China and the yuan by another name.

Bullion remains a large part of many central banks’ reserves, decades after they stopped using it to back paper money. Stockpiles of the metal help China to diversify its foreign-exchange holdings as the world’s second-largest economy seeks to raise the international profile of its own currency.

Nations Hoard

The central bank said on July 17 that it had boosted bullion assets to 53.32 million ounces, or about 1,658 metric tons, up from 1,054 tons in 2009, when it last updated the figures. The U.S. has the biggest reserves at 8,133.5 tons, data from the World Gold Council show.

Nations have expanded holdings in the past few years, a reversal from two decades of selling since the late 1980s. Many central banks remain exposed to a small number of key reserve currencies and look to gold as a hedge against volatile currency movements, according to the World Gold Council.

Countries will probably buy 400 tons to 500 tons of the metal this year, the council said in May. Russia more than tripled its hoard since 2005 and Kazakhstan has raised its holdings every month since October 2012.

Gold for immediate delivery added 0.2 percent to $1,117.13 an ounce by 5:12 p.m. in Singapore.

Source: Bloomberg

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