China increased its gold reserves for a seventh straight month, signalling ongoing strong demand for the precious metal from the world’s central banks. 

China raised its gold holdings by about 16 tons in May, according to data from the People’s Bank of China (PBOC) on Wednesday (June 7). Total stockpiles now sit at about 2,092 tons, after adding a total of 144 tons from November through last month.

Central banks bought a record volume of gold last year, as nations stockpiled the precious metal amid rising geopolitical uncertainty and stubborn global inflation. While buying fell steeply in the first quarter of this year, according to the World Gold Council, gold watchers expect purchases to remain robust.

About a quarter of central banks intend to increase their holdings over the next 12 months, amid increasing pessimism towards the future role of the US dollar, according to a survey published by the council in May. 

The London Bullion Market Association sees strong demand from central banks continuing into this year, chief executive officer Ruth Crowell said in an interview with Bloomberg TV earlier this week.

Central banks accounted for a nearly a quarter of global gold demand last year, and continued buying would offer some support to prices, which hit a record in May. Only Singapore was a bigger buyer than China in the first quarter.

China’s recent buying spree began in November, and is the first since a 10-month run that ended in September 2019. Prior to that, the last wave of inflows ended in late 2016. 

Meanwhile, the country’s end-May foreign currency reserves fell to US$3.18 trillion , from US$3.20 trillion the month before, according to the PBOC.

  - Bloomberg