China's gold reserves increased for the eighth consecutive month

Yesterday, the latest data released by the central bank showed that by the end of July, China's foreign exchange reserves had reached US$3103.7 billion, a decrease of US$15.5 billion annually, ending two consecutive rises. The central bank data also show that as of the end of July, China's gold reserves stood at 62.26 million ounces, valued at 88.876 billion US dollars, an increase of 320,000 ounces annually, the eighth consecutive month of increase.

The data released by the central bank on its official website show that from the end of October 2016 to the end of November 2018, the central bank's gold reserves remained unchanged at 59.24 million ounces. Since the end of December 2018, the central bank has increased its gold reserves monthly, reaching 62.26 million ounces by the end of July this year. It is understood that in the first half of this year, central banks purchased 374.1 tons of gold, the largest net increase in the world's official gold reserves in the same period since the World Gold Association had statistics. More emerging market economies are joining the gold market.

For the continuous increase of gold reserves, Huatai Macro-Li Chao team believes that the increase of central bank reserve assets in gold is not only due to the consideration of optimizing allocation, but also reflects the expectation of gold appreciation in the medium and long term, while adhering to the view that gold will rise in the medium and long term. There are three logics to support the gold price going up: the US dollar entering the downward channel of the big cycle is good for gold; the international political and economic environment is more volatile, which is good for gold; and the real interest rate is good for gold.

China's foreign exchange market has maintained stable operation. Wang Chunying, spokesman and chief economist of the State Administration of Foreign Exchange, pointed out that by the end of July 2019, China's foreign exchange reserves had reached $310.3 billion, up by 1% from the beginning of the year.

In July, China's foreign exchange market remained stable. In the international financial market, influenced by the global trade situation, the monetary policy of the major central banks, the outlook of Britain's decoupling from Europe and geopolitical factors, the exchange rates of the major currencies against the US dollar have declined, and the global bond index has risen. The scale of foreign exchange reserve is affected by exchange rate conversion and asset price changes.

On July 28, the SAFE published the Annual Report of the State Administration of Foreign Exchange (2018), which disclosed for the first time the data of foreign exchange reserve operation performance and monetary structure, and introduced the concept of foreign exchange reserve investment, risk management and the global operation platform. According to the annual report, according to the statistics of the International Monetary Fund (IMF) in 2018, China's foreign exchange reserves account for nearly 30% of the global foreign exchange reserves. In the face of complex and changeable international financial market, foreign exchange reserve diversified investment, China's foreign exchange reserve has achieved stable returns, with an average yield of 3.68% in the 10 years from 2005 to 2014. Wang Chunying said that since this year, in the face of the complex situation in which global risks and challenges have increased significantly, China's economic operation has maintained an overall stable and progressive development trend, and the main macroeconomic indicators remain within a reasonable range. China's economy has remained unchanged. The real economy sector and the financial market are resilient and have great potential to cope with external shocks, and continue to promote all-round reform and opening-up, which will provide support for maintaining overall stability of the scale of foreign exchange reserves.