China’s PBoC is Buying Gold

China’s PBoC is Buying Gold

$GLD, $XAU


FLASH: China’s PBoC is on a Gold buying spree as Asia’s Top economy expanded its Gold reserves for a 4th month running, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings.

June Gold settled today’s session rose $6.00 (+0.5%) to $1301.55/oz

The People’s Bank of China (PBoC) raised reserves to 60.62-M oz in March from 60.26-M a month earlier, according to data on its website Sunday. In tonnage terms, last month’s inflow was 11.2 tonnes, following the addition of 9.95 tonnes in February, 11.8 tonnes in January and 9.95 tonnes in December.

China, the world’s Top Gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the US.

The latest data from the PBoC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over Y 2019, it may end the year as the Top buyer after Russia, which added 274 tonnes in Y 2018.

Last year’s Gold buying by EM (emerging-market) central banks was the most robust in a long time as countries diversified reserves. The Citibank NYSE:C) is positive on Gold, targeting $1,400 by year-end.

Spot Gold fell for a 2nd month in March even after the Fed signaled it would pause rate hikes, which led to a surge in equities instead.

Still, the longer-term outlook is more Gold as central-bank demand should help support prices, with inflows running as high as last year, according to Goldman Sachs (NYSE:GS) which expects a rally to $1,450 oz over 12 months.

Physical delivery for immediate delivery was at $1,297 Monday.

Governments worldwide added 651.5 tonnes of bullion in Y 2018, the 2nd-highest total on record, according to the World Gold Council (WGC).

Russia has 4Xed its reserves within the span of a decade on President Vladimir Putin’s quest to break the country’s reliance on USD, and data from the central bank show holdings rose 1-M oz in February, the most since November.

China has previously gone long periods without revealing increases in Gold holdings. When the central bank announced a 57% jump in reserves to 53.3-M oz in mid-2015, it was the 1st update in 6 years. The latest pause was from October 2016 until December last year.

The reason all portfolios must include Gold.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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