Tuesday, 25 February, 2020

Gold rises as dollar, stocks ease ahead of U.S.-China talks

China's gold reserves rose for the 10th straight month in September Gold rises as dollar, stocks ease ahead of U.S.-China talks
Ginger Lawrence | 09 October, 2019, 17:10

China's gold reserves rose by 5.9 tons in September, bringing the total added since December 2018 to over 100 tons, Bloomberg reported, citing the People's Bank of China.

Its bullion reserves rose to 62.45 million troy ounces (2,141 tons) as of the end of last month - almost five percent more since the end of previous year.

"Gold continues to get appraised against the USA bond yields and what the Federal Reserve is going to do next", said AxiTrader market strategist Stephen Innes in a note. China will return to global financial markets after a week-long holiday, which could move the price of gold higher as China is the world's largest gold consumer. Central banks have been major buyers too, especially in emerging markets. Russian Federation is on course to become the world's fourth largest reserve holder, largely thanks to the steady interest in buying gold.

The most important of which was the civil unrest in Hong Kong, the situation in the Middle East, Brexit, and the ongoing US-China trade war.

Trade tensions and market uncertainty have set the stage for a further boost in gold purchases by global central banks.

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In Washington, Chinese Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer are set to resume top-level trade talks on Thursday, ahead of a scheduled increase in U.S. tariffs on $250 billion worth of Chinese goods on October 15. Official data also showed that China's foreign exchange reserves came in at 3.0924 trillion USA dollars at the end of September, increasing by 19.7 billion US dollars, or 0.6 percent from the beginning of 2019.

Gold is up nearly 18 percent this year and last month hit $1,550 an ounce for the first time since April 2013. While prices fell 3.2 per cent in September, they are still up 17 per cent this year.

Russian Federation also has been adding substantial quantities of bullion; central banks worldwide have snapped up more than 450 mt during the first eight months of 2019, helping push total gold demand to a three-year high, the World Gold Council has said. The PBOC data were released at the weekend.

Russian Federation and China have been consistently stockpiling gold bullion in recent years to shift their growing worldwide reserves away from the U.S. dollar. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, that was the first update in six years.