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China Central Bank Adds More Gold Amid Elevated Local Premium

(Bloomberg) — China added to its gold reserves for an 11th straight month in September when a surge in local gold premium drew market attention.

Bullion held by the People’s Bank of China rose by 840,000 troy ounces in September, according to official data released Saturday. 

Among the world’s central banks, China has stood out this year as a keen buyer of gold. Robust demand in the Asian nation has been a support for the precious metal, which has come under pressure from rising interest rates around the world. Global central bank demand in August was sizable, though limited to a small number of countries including China, the World Gold Council said in an October statement.

Meanwhile, concerns about economic slowdown have driven domestic demand toward the asset of safety, causing the local premium over international prices to surge to record highs last month. And import curbs imposed by the China’s central bank potentially aimed at supporting a weak yuan also contributed to the rise. 

While premiums saw a sharp decline last week after the government issued import quotas to banks, there is heightened attention on the central bank’s purchasing activity as prices remain elevated for local consumers. 

 

©2023 Bloomberg L.P.


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