China shores up gold purchases amid rising global uncertainties

China's gold holdings showed a sharp increase in the last 10 months, as the country continued to shore up its purchases amid rising global uncertainties and possibilities of further rate cuts by global central banks, experts said.

During the 10 months from December 2018 to September this year, China's total holdings of gold rose to 62.64 million ounces (about 1,948 metric tons), according to data from the State Administration of Foreign Exchange.

"Gold is the best safe haven amid rising global uncertainties as it offers extremely high returns and is easily tradable," said Huo Songling, secretary to the executive board of China National Gold Group Co Ltd, a centrally State-owned firm engaged in the mining and refining of gold, silver, copper, and molybdenum.

"China has been stocking up on the precious metal ever since it resumed purchases of the yellow metal in December 2018 and the trend is likely to continue," she said.

During the first six months of this year, trades in the precious metal rose by 101 percent to 8.8 trillion yuan ($1.24 trillion) on the Shanghai Futures Exchange, according to data from the Ministry of Industry and Information Technology. The total volume of gold transactions rose by 88.3 percent year-on-year to 30,200 tons.

Gold transaction value rose 5 percent year-on-year to 8.6 trillion yuan on the Shanghai Gold Exchange. But total volume of gold transactions edged down by 1.4 percent year-on-year to 29,900 tons.

"Demand for gold jewelry has risen due to string demand from consumers in the second-and third-tier cities," Huo said. During the first half, gold jewelry consumption rose by 2 percent year-on-year to 358.8 tons.

"China and Russia are currently the top two gold purchasers. Countries like Turkey and Kazakhstan have also increased their gold reserves," Huo said.

According to the World Gold Council, central banks had added 374.1 tons of gold to their reserves in the first six months of this year. A report from Bloomberg said that helped push global gold demand to a three-year high.

"Central banks are also increasing their types of gold stocks," Huo said.

"Facing ongoing international trade uncertainties, many countries are considering gold a hedge against the US dollar," said Wang Shuli, executive board director for Jingyijinhui, a consulting firm on gold, adding that the trend has pushed up gold prices to some extent.

The gold spot price hit $1,488.71 per ounce on Thursday, the latest data from online database Gold-price showed. It said the gold price has increased by over 20 percent from a year ago.