In August, another 190,000 ounces were added to 6245,000 ounces, and gold reserves rose nine times in succession. This is the latest data sheet released by the Central Bank of China on September 7.
Driven by the same factors, gold prices started a bull market in the summer of 2018 and have risen by more than 30% so far. Industry insiders believe that although gold prices fluctuate sharply in the short term with the release of some heavy data or the speeches of key figures, the continued rise in the second half of the year is supported by easing expectations from the global central bank, the increased possibility of interest rate cuts from the Federal Reserve, and the emergence of news of hedging from time to time.
The growth of foreign exchange reserve in August has attracted much attention because of its parallel with the breaking of the 7-year exchange rate of RMB. Wang Chunying, spokesman and chief economist of the State Administration of Foreign Exchange, said that the dollar index rose slightly and the prices of major national bonds rose due to multiple factors such as global economic growth, trade situation and geopolitics. The scale of foreign exchange reserve has increased due to exchange rate conversion and asset price changes.
Gold reserves are also of concern. According to central bank data, by the end of August, Chinas gold reserves stood at 62.45 million ounces, an increase of 190,000 ounces over the end of July, and have risen for nine consecutive months.
Prior to the nine consecutive rises, the Peoples Bank of China did not increase its gold holdings from October 2016 to November 2018. Wang Chunying explained the reasons for Chinas increase in gold holdings in July this year. He said that gold reserves have always been an important part of the diversification of international reserves. Gold has multiple attributes of Finance and commodity, which is helpful to adjust and optimize the overall risk return of the international reserve portfolio. From a long-term and strategic point of view, the Central Bank of China dynamically adjusts the allocation of international reserve portfolio to ensure the safety, mobility and value-added of international reserve.
In dollar terms, at the end of August, Chinas gold reserve was 95.45 billion US dollars, ranking sixth in the world, but the gold reserve accounted for only about 3% of the foreign exchange reserve, while the proportion of the United States, Germany, Italy and other countries was more than 60%.
Zhao Qingming, chief economist of China Financial Futures Exchange Research Institute, said that Chinas gold reserves, whether absolute or relative, are relatively low in large countries and far from the first. Therefore, it is necessary to increase the gold reserves moderately in terms of the allocation of official reserves.
Zhao Qingming believes that from a global point of view, currency depreciation is a major trend, and moderate increase in gold as a hard currency is also inevitable. Although gold prices will fall, it has both commodity and financial attributes. At present, Chinas foreign exchange reserve allocation of gold is still relatively small, from the perspective of optimal allocation, the future will continue to increase, but it will be a slow process.
Gold prices fluctuate sharply in the short run, but they are still bullish
But in the short term, gold prices fluctuate a lot. For example, on September 6, gold continued its overnight decline, falling to a low of $1502 per ounce before the announcement of the US-Africa Agriculture Commission; after the expected non-agricultural announcement, gold prices turned upward, rising by more than $20 per ounce to $1527 per ounce at most; and in the statement of Federal Reserve Chairman Powell affirming the current state of the US economy, gold prices rose by more than $20 per ounce to $1527 per ounce at most. Gold prices fell again after the speech.
But insiders believe that gold will not be excluded from the technical adjustment, but the overall bullish pattern will not change for the time being. Xie Yi, executive investment director of the former Open Source Fund, said that in the long run, downward pressure on the U.S. economy is accumulating and the Federal Reserves interest rate reduction cycle has begun. Sino-U.S. trade frictions are repeated and it is expected to take a long time for a satisfactory result. All these factors are good for gold in the long run, so we still look forward to gold. Its not that gold is going up every day. There are still short-term fluctuations, but it wont change the long-term trend.
Gold analyst Li Xingzhao also said that because the Feds expectations for interest rate cuts have increased, most importantly the easing expectations of the global central bank and the occasional emergence of risk aversion news, the overall bullish price of gold may be around $1,600 per ounce.
Jindian Welcomes Gold, Nine, Silver and Ten
On the afternoon of September 8, a reporter from the Beijing News visited three gold stores and found that the sales of gold investment varieties represented by gold bars were hot.
A gold store employee told reporters that the price of gold was still around 290 yuan/g this Spring Festival, and it has risen about 60 yuan per gram so far. One day it rose 8 yuan, and another day it fell 3-4 yuan. According to the employee, the price of gold on September 8 was 349.3 yuan per gram, and it is expected to continue to rise to about 380-390 yuan per gram before the Spring Festival next year. The upward trend is still very large.
According to her introduction, the current gold nine silver ten market cycle, the recent purchase of gold customers are also many. Taking gold bars as an example, buyers choose from 20 grams to 100 grams. Most of them buy 50 grams and 100 grams for their own savings, with a total price of more than 30,000 yuan. Most of them buy 20 grams and 30 grams for donation, with a total price of more than 10,000 yuan.
New Beijing News reporter Cheng Weimiao and Zhang Shuxin
Source: Yang Bin_NF4368, Responsible Editor of Beijing Newspaper