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China’s central bank buys 32 tons of gold driving up gold price

The People’s Bank of China announced Wednesday (Dec. 7) that it has purchased an additional 32 tons of gold reserves for the first time since September 2019, at a cost of $1.8 billion.

With this latest gold purchase, the Chinese central bank’s gold reserves rose to 1,980 tons worth $112 billion.

China officially has the sixth largest gold reserves in the world after Russia, Germany and the US. The U.S. has the largest gold reserves in the world at 8,133.5 tons.

The World Gold Council (WGC) announced that central banks worldwide purchased a total of 399 tons of gold in the third quarter of 2022, the highest quarterly purchase ever recorded. The WGC did not specify which country’s central bank purchased the largest amount of gold in its reserves. However, market participants predicted that these countries could be China and Russia.

Analysts believe that gold purchases by the People’s Bank of China and central banks around the world will be a factor in the price of gold on the world market after the sharp decline in prices in recent months. This is due to concerns about aggressive interest rate hikes by the Federal Reserve (Fed). In addition, the rise in U.S. Treasury bond yields has driven up the cost of holding gold, as gold is an interest-free asset.

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