The central bank's gold reserves have increased for 15 consecutive years, Tan Yaling: The depreciation of the US dollar is related to the rise in gold prices, and the follow-up upward trend of international gold prices is relatively strong

Every reporter: Zhang Hong Every editor: Ma Ziqing

Data released by the State Administration of Foreign Exchange on February 7 showed that as of the end of January 2024, the mainland's gold reserves were 72.19 million ounces, an increase of 320,000 ounces from the end of December 2023 and the 15th consecutive month of increase in gold reserves.

In 2023, the international gold price has experienced two cycles, exceeding $2,000 per ounce several times, and the frequency of cycle fluctuations has accelerated compared with before. On December 4 last year, the price of COMEX (New York Metal Exchange) futures gold reached a new high of $2152.3 per ounce, and then maintained a high level of volatility.

The reporter noted that in recent years, global central banks have generally favored gold. Tan Yaling, president of the China Foreign Exchange Investment Research Institute, said in a telephone interview with every reporter that on the one hand, the improvement of the economic capacity and wealth level of various countries has made countries dare to increase their gold reserves; on the other hand, the continuous increase in gold holdings of various countries has a great deal to do with the hegemony of the US dollar (especially some unreasonable economic sanctions). Central banks are relatively risk-aware, so they are actively increasing their gold reserves.

The mainland's gold reserves have achieved "fifteen consecutive increases", with an increase of 320,000 ounces in January this year

On 7 February, the State Administration of Foreign Exchange (SAFE) updated its official reserve assets. As of the end of January 2024, the mainland increased its gold reserves for the 15th consecutive month to 72.19 million ounces (US$148.229 billion), an increase of 320,000 ounces from the end of December 2023.

Tan Yaling, president of the China Foreign Exchange Investment Research Institute, said in a telephone interview with every reporter: First, the mainland's foreign exchange reserves are relatively sufficient in the world's comparison; second, based on the current relationship between the mainland and the United States, the mainland's gold reserves account for a relatively small proportion of the entire foreign exchange reserves.

The reporter noted that in recent years, global central banks have generally favored gold. On January 31, the World Gold Council's latest Global Gold Demand Trends Report showed that global central bank purchases of gold reached 1,037 tonnes last year, the second highest in history, and only 45 tonnes less than in 2022.

Talking about the reasons, Tan Yaling said that on the one hand, the improvement of the economic capacity and wealth level of various countries has made countries dare to increase gold reserves; on the other hand, the continuous increase in gold holdings of countries has a great relationship with the hegemony of the US dollar, especially some unreasonable economic sanctions. Central banks are relatively risk-aware, so they are actively increasing their gold reserves.

Tan Yaling believes that the increase in holdings of central banks should not be regarded as an inertia, and there should be ups and downs in the future, and countries will adjust (foreign exchange reserves) according to their own state. In addition, the increase in holdings and holdings is not a consistent behavior of all countries, and the country-specific adjustment of gold reserves will vary greatly.

The depreciation of the US dollar is related to the rise in gold prices, and the subsequent upward trend of international gold prices is relatively strong

In 2023, the international gold price has experienced two cycles, exceeding $2,000 per ounce several times, and the frequency of cycle fluctuations has accelerated compared with before. On December 4 last year, the price of COMEX (New York Mercantile Exchange) futures gold reached a new high of $2152.3 per ounce and then maintained a high level of volatility. On February 7, as of press time, London gold spot was reported at $2,033.56 per ounce, and New York gold futures were reported at $2,049.6 per ounce.

Looking ahead, is it more likely that the international gold price will continue to maintain cyclical fluctuations, or is there still room for growth? Tan Yaling believes that the subsequent upward trend of the international gold price is relatively strong.

First of all, it is related to the depreciation of the US dollar, because the depreciation of the US dollar is accompanied by the rise in the price of gold is very normal logic, and the US dollar is basically inversely correlated with gold. Last year, the international gold price was relatively high in the fourth quarter, and the price rose more obviously, during which the dollar index fell from 107 all the way to around 101, and the depreciation of the dollar has a very important correlation with the rise in gold prices. The dollar is likely to depreciate again this year. Recently, the US dollar has remained around 103 to 104, so gold has stabilized at $2,000, and the benchmark relationship between gold and the US dollar is very clear.

图片来源：同花顺iFinD

Second, geopolitical risks could drive inflation in the future. On the one hand, it is political risk-off, and on the other hand, it is to regulate inflation. Gold may be the best way to prevent and regulate inflation. From this point of view, the future rise of gold is inevitable. The trend is upward, but if you look at the upward cycle, there will be a phased correction and a sharp decline in gold prices, but this does not mean that the trend of gold price increases will change.

National Business Daily