China buys $1.8 billion worth of gold in reserves, reduces USD assets

By Al Mayadeen English
Source: Agencies
10 Dec 2022 09:22
3 Shares

China acquired 32 tons of gold in a new addition to its gold reserves.

China reveals its gold reserves numbers as it attempts to reduce the proportion of USD assets it possesses (AFP)

Early this year, countries all across the world went on a gold-purchasing binge, which many believe may be a sign of escalating economic turmoil. Long used as currency, gold is valued for maintaining its worth despite the ups and downs of capitalism. It also has significant industrial applications, though.

China's State Administration of Foreign Exchange recently disclosed statistics showing that it just made its first gold purchase for its reserves in three years.

The figures, provided at the start of the month, indicated that China acquired 1.03 million ounces of gold, or the equivalent of 32 tons, for $1.8 billion.

China now has 63.67 million ounces of total gold reserves, or nearly $112 billion, up from 62.64 million ounces before the purchase. It holds the sixth-largest gold reserve in the world, behind the US, Germany, Italy, France, and Russia.

The third quarter of 2022, from July 1 to September 30, had the highest volume of gold purchases for that time period ever, at 399 tons, according to the World Gold Council. Prices are presently about $1,775 an ounce due to the huge demand.

Chinese media indicated that Beijing made the significant purchase in part to reduce the proportion of USD assets it possesses. Prior to Q3 2022, China sold $113.9 billion worth of US Treasury bill.

As rumors of a worldwide recession in the upcoming year intensify, the buying of gold is also perceived as reflecting the rising volatility of global markets.

However, China also used 1,100 metric tons of gold in 2017, making it the greatest consumer in the world.

The malleable metal has several industrial uses, but around 80% of gold is used in electronics, where it is valued for its conductivity qualities and tarnish resistance.

With 36% of the yearly production, China is the world's top producer of electrical equipment.

Due to its pivotal position, China has become the largest buyer of semiconductor chips, which are used in electronics. This has made semiconductor chips a crucial front in the escalating conflict between Beijing and Washington.