China boosts gold reserves for the first time in over 3 years in possible attempt to diversify away from dollar

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China boosts gold reserves for the first time in over 3 years in possible attempt to diversify away from dollar
Chinese President Xi Jinping.Getty Images
  • For the first time in over three years, China reported an increase in its gold reserves.
  • The People's Bank of China boosted its gold holdings by 32 tons in November compared to the previous month.
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New government data revealed that the People's Bank of China boosted its gold reserves for the first time in over three years, potentially signaling Beijing's attempt to diversify away from the US dollar.

China increased its gold holdings by 32 tons in November compared to the prior month. In total, the People's Bank of China holds 1,980 tons, the sixth-biggest central bank holding worldwide, according to Bloomberg.

During the third quarter, unknown buyers snapped up huge amounts of gold in the metals market, and only some of those purchases were made public. Onlookers had speculated that it could be China or Russia adding gold to their coffers, and now it appears some of the guesses were correct.

Meanwhile, China's foreign exchange reserves — the world's largest — rose $65.1 billion to $3.117 trillion last month, a higher jump than expected.

China has increasingly moved to distance itself from the US-dominated financial system. Geopolitical tensions remain high between the two global powers, and the impact of Washington's economic sanctions on Russia have given policymakers in Beijing reason to adjust course and insulate themselves from the West.

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Gold moved higher 0.26% to hit $1,774.69 per ounce on Wednesday, and has seen a 5.3% climb over the last month.

The US Dollar Index, a measure of the greenback against a basket of currencies, slipped 0.31%. The dollar has soared as high as 17% in 2022, though over the last month it has shed more than 5% as investors price in an expected slowdown in Fed rate hikes.

Meanwhile, the yuan inched higher roughly 0.25% Wednesday, hovering just below the 7-per-dollar threshold.

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