Published: Wed, October 09, 2019
Economy | By

Gold edges lower as dollar strengthens ahead of trade talks

Gold edges lower as dollar strengthens ahead of trade talks

China adds over 100 tons of gold to its coffers this year amid ongoing trade war with US The People's Bank of China raised bullion reserves to 62.64 million ounces (1,957 tons) last month from 62.45 million (1,951 tons) in August, bringing this year's gold haul to over 100 tons.

Its bullion reserves rose to 62.45 million troy ounces (2,141 tons) as of the end of last month - almost five percent more since the end of previous year. China will return to global financial markets after a week-long holiday, which could move the price of gold higher as China is the world's largest gold consumer.

Central banks have been major buyers of gold and likely will continue to do so as protectionist policies and geopolitical concerns add to demand, says Suki Cooper, precious metals analyst at Standard Chartered Bank.

Russia's bullion holdings accounted for around 2,217.68 tons by late July, after racking up another nine tons of the precious metal in just one month, so that since the start of the year, the country's central bank has boosted its gold holdings by a total of 106 tons.

According to the WGC, Europe now accounts for 44% of all ETF holdings and it was Europe again that initially drove gold higher Tuesday after United Kingdom government sources briefed local media that a no-deal Brexit had become more likely.

USA and Chinese officials, including Vice Premier Liu He, are expected to resume trade talks on October 10-11.

The bullion build-up coincides with a trade war with the USA and a marked slowdown in growth at home. Official data also showed that China's foreign exchange reserves came in at 3.0924 trillion USA dollars at the end of September, increasing by 19.7 billion US dollars, or 0.6 percent from the beginning of 2019.

December gold fell 0.03% Tuesday on the Comex division of the New York Mercantile Exchange, at $1,503.90 per ounce.

More specifically, per data released by the Central Bank of Russian Federation in September, Moscow augmented its stockpile of gold by more than $7.5 billion in one month.

China has continued to plow funds into gold as a buffer against Trump's trade war, adding 5.9 tons of the metal to its reserves in September. When the central bank announced a 57 per cent jump in reserves to 53.3 million ounces in mid-2015, that was the first update in six years.

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