(Kitco News) – China’s central bank announced on Saturday that it had added gold to its reserves for the seventh month in a row in May.
“Data reported by the People's Bank of China shows its #gold reserves rose by almost 2 tonnes in May,” wrote Krishan Gopaul, Senior Analyst, EMEA, at the World Gold Council. “This lifts YTD net purchases of gold to 17 tonnes, and gold reserves to 2,296 tonnes.”
China’s gold reserves were valued at $241.99 billion at the end of last month, down from $243.59 billion at the end of April, the PBoC said. Gold prices hit an all-time high above $3,500 per ounce in April, which boosted the value of the country’s holdings.
Last year, the PBoC took a six-month break from gold purchases after 18 straight months of adding to reserves, but the central bank resumed purchases in November following Donald Trump’s U.S. presidential election victory.
China has also taken recent steps to relax their control over the country’s domestic gold market. On May 27, the Shanghai Futures Exchange (SHFE) announced they would open up China’s domestic futures market to direct involvement by overseas investors and brokers.
The SHFE published 34 different proposals covering a wide range of trading activities from gold and silver options trading and hedging to precious metals futures. The exchange said the goal was to "fully introduce overseas participants" and support the internationalization of the renminbi.
The proposed changes include allowing foreign brokers and other traders directly onto the exchange rather than operating through an onshore intermediary, as is the case today. Participants would also be allowed to post margins in U.S. dollars and other foreign currencies. The draft rule changes are available for public comment until June 4.
The SHFE proposals are the latest step in China’s strategy to make the country’s influence over the trade and pricing of commodities like gold and silver match their dominant role in the production and consumption of the physical commodities.
On April 21, the PBoC and three other government departments announced that they would invest in the internationalization of the Shanghai Gold Exchange – including warehouses for overseas delivery – setting the SGE up to compete with the London Metal Exchange (LME) for control over global pricing.
The PBoC announcement did not specify which products would be the focus of the new initiative, but the Shanghai Gold Exchange primarily trades precious metals such as gold, silver, and platinum.
