The People's Bank of China (PBOC) continued its gold accumulation for the 20th consecutive month, increasing its holdings in Hong Kong and gradually moving some reserves from London, supporting its new gold settlement system.
On August 7, 2569, at 08.01:XNUMX a.m., Bloomberg News reported that The People's Bank of China (PBOC) has increased its gold holdings in Hong Kong while continuing to move some of its gold reserves back from London to Hong Kong. To support the strategy of promoting Hong Kong as a major global gold trading hub and increasing its role in determining gold prices in the international market.
Bloomberg, citing sources familiar with the matter, reported that the PBOC has been steadily increasing its gold reserves in Hong Kong in recent months. This latest move is part of a long-term trend of China gradually repatriating some of its gold reserves from London, and the shifting of gold from London to Hong Kong is expected to continue.
Generally, many central banks around the world choose to keep a portion of their gold reserves in London, as it is one of the largest and most liquid markets for gold bullion in the world. This allows central banks to manage their gold reserves flexibly, including lending gold to commercial banks to generate returns.
However, in recent years, some central banks have begun repatriating more gold reserves held abroad for security and geopolitical reasons. India and Serbia are among the countries that have done so, while China is one of the largest buyers of gold among central banks worldwide.
The People's Bank of China (PBOC) increased its gold purchases in June to their highest level since October 2566, marking the 20th consecutive month of increases in gold reserves. This reflects continued demand for the asset amid global economic and geopolitical uncertainties.
The increase in gold reserves in Hong Kong also signals PBOC support for Hong Kong's Gold Clearing System, which began a trial in July. This system, complete with a new benchmark price index, is a key component of PBOC's plan to increase Hong Kong's role in global gold pricing.
This move could increase competition with existing gold trading hubs, including Singapore, which is moving forward with developing its own gold settlement system this year in order to position itself as a major gold trading center in Asia as well.
Pan Gongsheng, governor of the People's Bank of China (PBOC), stated during the official opening ceremony of the system in July that the PBOC would continue to increase the allocation of China's foreign exchange reserves to Hong Kong, reaffirming a commitment he announced as early as 2568.
In addition to increasing its own gold reserves, Hong Kong has invited other central banks to join its gold settlement system, focusing primarily on countries participating in China's Belt and Road Initiative (BRI).
These efforts are part of a broader strategy by China to increase its role in the global gold market, including positioning itself as a custodian of other countries' gold reserves. Cambodia had previously accepted China's offer to deposit some of its gold reserves with China.
China's increasing role comes at a time when central banks worldwide have become major buyers in the gold market. Government purchases have been a key factor in driving gold prices higher for approximately three years, culminating in a record high of near $5,600 per ounce in late January.
However, after the Iran-Iran conflict began the following month, gold prices entered a correction phase as markets worried that higher energy prices would increase inflationary pressure and potentially keep interest rates high for longer—a negative factor for gold, which does not yield interest returns.
In recent weeks, buying pressure from China has played a key role in supporting gold prices above the key support level of $4,000 per ounce. In addition to further purchases by the PBOC, Chinese institutional investors have also bought gold during price dips, resulting in the longest continuous inflow of capital into Chinese gold ETFs since March.
The gradual relocation of gold reserves from London to Hong Kong is not merely a change in China's gold storage location, but also reflects a strategy to increase Hong Kong's role in the global gold market structure. This encompasses everything from gold custody and settlement to price setting, potentially boosting China's influence in the international gold market in the long term.
refer : bloomberg.com
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