The fact that gold has traditionally been a safe-haven asset suggests that China may be adding holdings partly due to uncertainties of the economic outlook.

China has boosted its gold reserves for the fourth straight month, fuelling investor thoughts that central banks will add to holdings, and adding to optimism that globally central banks will continue to build holdings. The move also suggests that China is taking a cautious financial market stance given that the yellow metal is often seen as a safe-haven asset.

According to a report by Bloomberg late last week, the People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December, the news report said. 

The report noted that if China continues to add bullion at the same rate that it did during a period from mid-2015 to October 2016 when holdings rose steadily, it will surpass Russia as the top gold buyer. 

Separately, the Chinese central bank’s foreign exchange reserves grew for the fifth straight month in March to $3.099 trillion.