PBoC increases gold reserves by buying 16 tons in August

The gold price is trading largely unchanged at $1,125 and €1,000 per troy ounce this morning. Market participants will be focusing their attention today on several speeches to be given by members of the US Federal Reserve in the hope of receiving some indication of when the Fed might hike interest rates. 

Fed Chair Yellen will also be giving a statement this evening. A week ago, Yellen gave a speech in which she more or less announced a rate hike before the year is out. The market believes the probability of a rate hike happening this year is well under 50%, as can be seen from the Fed Fund Futures. 

China's central bank, the People's Bank of China (PBoC), appears to have switched to publishing a monthly report of its gold reserve holdings. As the PBoC announced yesterday, it topped up its gold holdings in August by 520,000 to 54.45 million ounces (+16.2 to 1,693.4 tons), though this means it purchased only roughly a good half as much gold as for example the Russian central bank did (see Commodities Daily from 22 September). 

The PBoC had already bought around 19 tons of gold in July, prior to which it had announced that it had increased its gold reserves by 604 tons between 2009 and 2015. Monthly reporting of gold purchases should contribute to greater transparency and make it easier to track the actions of the Chinese central bank. 

"Given the size of Chinese currency reserves and the extent of its domestic gold production, even higher gold purchases might have been assumed. That said, the decrease in currency reserves may have put the brakes on buying interest of late, in August, currency reserves declined to a two-year low of $3,557.4 billion", says Commerzbank.