China. has been increasing its gold reserves as a safe asset in response to global inflation and financial instability in Europe and the U.S.. Reportedly, China’s net gold import through Hong Kong plunged 23% month-on-month.
Citing related data released by the Hong Kong Bureau of Statistics on the same day, the media reported that China’s net import through Hong Kong in September was 26.793 tons, which fell for the second consecutive month as the uneven economic recovery weighed on demand.
In September, China’s total gold imports via Hong Kong fell 19% from the previous month to 33.581 tons.
A local analyst pointed out, “As domestic demand in China is clearly sluggish and the government continues to take financial support measures, the gold import allocation seems to be still at a low level.”
The People’s Bank of China manages and controls the amount of gold imports by allocating supplies to commercial banks.
“Consumers’ discretionary spending is likely to be curbed against the backdrop of uncertainty over China’s leading economic performance,” a gold strategist said, adding, “Gold demand is under pressure. “Due to the high prices, demand will continue to slump until inventory accumulation before Lunar New Year (New Year’s Day) begins,” he predicted.
Earlier, China’s National Exchange Administration said its gold reserves in China were 71.2 million ounces (2,214 tons) at the end of October, up 740,000 ounces (23 tons) and 1.05% from 70.46 million ounces at the end of September.
In terms of dollar conversion, it was 142.17 billion dollars, up 10.38 billion dollars from 131.79 billion dollars at the end of September, up 7.88 percent.
China’s gold reserves grew 9.7% for the 12th consecutive month. China is stockpiling gold as a safe asset in preparation for the prospect of a long-term rise in U.S. interest rates.
The period of increase is the longest since December 1999. Gold reserves have increased by 13.7% over the past year.
Analysts say that as long-term U.S. interest rates continue to rise, they will expand their holdings of gold, which is a safe asset, and reduce U.S. bonds instead.
