World Gold Council Tells China to Increase Gold Reserves

China should increase its gold holdings to around 5 percent of its total foreign exchange reserves to help diversify currency risks, the World Gold Council (WGC) said.

China currently holds about 1.6 percent of its foreign exchange reserves in gold, which is relatively low compared with developed countries and some developing countries, WGC China managing director Roland Wang said.

“The ideal amount should be at least 5 percent of its total forex reserves,” Wang told Reuters in an interview in Hong Kong.

China last raised its gold holdings in April 2009, when reserves rose to 33,890,000 troy ounces (about 1,054 tonnes), from 19,290,000 troy ounces, according to central bank data. The holding was unchanged as of December 2014. Data for 2015 was not available on the central bank’s website (www.pbc.gov.cn).

 
China’s holdings as a percentage of total reserves in Q4 2014 compare with 2.4 percent for Mexico, 5.7 percent for Australia, 6.7 percent for India and 12.1 percent for Russia, according to WGC figures.

Wang said the gold council was in regular communication with Chinese authorities, including the country’s central bank and China Gold Association.

Increased gold holdings could boost investor confidence at a time when China is pushing the internationalization of the yuan, he added.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza