China’s gold reserves stood at 1,658 tonnes at the end of June, the central bank said on Friday, up 57 percent from the last time it adjusted its reserve figures more than six years ago.
Despite the tonnage increase, gold now accounts for 1.65 percent of China’s total forex reserves, against 1.8 percent in June 2009. The United States, the biggest official sector gold holder, holds nearly 73 percent of its reserves in gold.
The figures make China the world’s sixth largest official sector gold holder after the United States, Germany, the International Monetary Fund (IMF), Italy and France.
Speculation in the gold market has been rife in recent years over the size of official sector reserves in China, which is the world’s biggest producer of the precious metal and vies with India for the title of number one consumer.
China considers its gold holdings a state secret and does not report its holdings on a monthly basis to the International Monetary Fund as most other countries do.
It last adjusted its reserve figures in April 2009, when the level was lifted to 1,054.1 tonnes from 600 tonnes.
In a statement, the People’s Bank of China said investment in gold would be beneficial for risk management.
“On the basis of our assessment of the value of gold assets and our analysis of price changes, and on the premise of not creating disturbances in the market, we steadily accumulated gold reserves through a number of international and domestic channels,” it said.
The increase, which amounts to 604 tonnes, worth $21.964 billion at today’s prices, would help guarantee the security, liquidity and value of China’s international reserves, it said.
It said it would remain flexible when deciding whether or not to adjust gold reserves in the future.
A WikiLeaks cable in 2011 cited a Chinese newspaper as saying that the country’s large gold reserves would be “beneficial in promoting the internationalization of the RMB.” (http://wikileaks.org/cable/2009/04/09BEIJING1134.html)
“There has been ongoing market chatter that China had been amassing gold, and that had gained more importance ahead of October, when the Chinese want to be included in the SDR. It was felt by many that they would be more open, and that would mean revealing any increase in their reserves,” Societe Generale analyst Robin Bhar said.
Chinese state news agency Xinhua reported in March that Chinese Premier Li Keqiang has asked the head of the IMF to include the yuan in its special drawing rights (SDR) basket, currently made up of dollars, yen, pounds and euros.
There was little immediate impact on gold prices on Friday. Spot gold was steady in the wake of the announcement, though it later slid to its lowest in more than five years after U.S. housing and inflation data boosted the dollar.
“This (figure) was not unexpected. If anything, it was slightly surprising that it wasn’t more,” Bhar added. “The market was looking at a figure north of 2,000 tonnes.”