China increases gold and foreign exchange reserves for the sixth consecutive month.

Gold sets records this year

This year, gold has reached record levels due to purchases by central banks seeking to expand their reserves and reduce reliance on the US dollar.

Gold prices have risen nearly 30% this year, supported by heightened investment demand. The trade war led by the US is troubling financial markets, making American assets less reliable and driving demand for a 'safe haven', Bloomberg writes.

China's investments in gold

In China, there is increased investor interest in gold - trading volumes on the Shanghai Futures Exchange have reached record highs in recent weeks. Strong domestic demand has also led the People's Bank of China to issue new quotas to commercial banks for gold imports.

According to Goldman Sachs Group Inc., after the freezing of Russian reserves, central banks have increased their gold purchases approximately fivefold since 2022. Analysts at the bank have assessed this trend as a 'structural shift in reserve management behavior' that is unlikely to experience a 'short-term change.'

The People's Bank of China held about 8% of its reserves in gold at that Time, which is below the average level and significantly less compared to developed economies. If Beijing wishes to raise this share to 20% and continues to purchase around 40 tons per month, it will take a little over three years to reach this level.

Additionally, the Chinese authorities are taking measures to support the economy and prepare for trade negotiations with senior US officials this week.

The heightened interest in gold among central banks and investors indicates a growing demand for 'safe' assets in times of financial instability and trade conflicts. The more countries seek to diversify their reserves and reduce risks associated with the US dollar, the more they turn their attention to gold.