In response to the prolongation of the trade war initiated by U.S.-imposed tariffs, the People’s Bank of China has continued to extend its bullion reserves by 15.86 tons since May, an addition to a prior 58-ton increase last April according to data released this week by the Chinese government.
Such substantial acquisition of gold reflects the PRC’s endeavor to diversify its assets away from dollar-based ones, as the continued trade war threatens to hurt growth expectations. According to analysts, China’s gold reserves can increase by 150 tons this year if the current rate of accumulation holds.
With the prospect of a slowing domestic economy more imminent as a result of the Trump administration decision to raise tariffs on Chinese imports, The world’s top gold producer and consumer is seeking to decrease its hold of Dollar assets for a less liable commodity. However, the decision by the Chinese bank to increase its bullion holdings has also been implemented by other central banks, particularly those from emerging markets; according to World Gold Council data, purchases this first quarter have been the highest in 6 years.