China's central bank buys gold for 6th straight month
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The People's Bank of China added nearly 16 tons of gold to its reserves in May, the sixth straight month China's central bank has added to its gold reserves.
Why it matters: The Chinese have been working to move away from the dollar as the world's international funding currency for years. They've increased these efforts since President Trump's election.
What it means: The gold buying binge is part of the Chinese government's "determined diversification" away from dollar assets, Argonaut Securities (Asia) Ltd. analyst Helen Lau told Bloomberg, adding that retail demand has also increased. China could buy 150 tons in 2019 at this rate of accumulation, Lau said.
- Precious metals company Kitco cites analysts at Commerzbank who estimates that the PBOC has bought 85 tons of gold in total since December.
- "One reason is likely to be the trade dispute with the U.S., which has prompted China to reduce its dollar holdings and U.S. Treasuries of late," the analysts said, according to Kitco.
The big picture: Gold is gaining popularity among the world's central banks, particularly the Chinese, the world's top gold consumer. Last year 15% of the world’s gold demand came from came from central banks, which collectively bought 651.5 tons, according to World Gold Council data.
The last word: Bloomberg notes that prices of gold bullion have risen for the past 3 weeks, "hitting the highest level since April 2018, as investors seek out havens and traders increase bets that the Federal Reserve will cut interest rates following signs of weakness. Spot gold was at $1,329.60 on Monday, after climbing 1.7% in May."
Go deeper: The world's slow drift away from the dollar
