China's foreign exchange reserves rose more than expected in April, according to official data released on Sunday. The yuan fell 0.63% against the dollar in April while the dollar last month dropped 0.94% against a basket of other major currencies.
At the end of April, China held 66.76 million fine troy ounces of gold, rising from 66.50 million ounces at end-March. The value of China's gold reserves rose to $132.35 billion from $131.65 billion at the end of April.
China's gold reserves have increased for the sixth straight month, with total stockpiles now at 2,076 tons. The increase comes as central banks around the world are expanding their holdings of bullion amid rising geopolitical and economic risks.
"China’s recent buying spree began in November and its end-April foreign currency reserves rose to $3.2048 trillion, up by $20.9 billion from the month before," said Li Wei, an economist at Standard Chartered Bank in Beijing.
The rise in foreign-exchange reserves is a result of US dollar depreciation and rise in global financial asset prices.
"The increase can be attributed to a combination of factors including valuation changes due to fluctuations in global financial markets as well as appreciation or depreciation effects caused by non-US-dollar-denominated assets," explained Christopher Balding, associate professor at Fulbright University Vietnam.
As central banks continue facing increasing pressure from geopolitical tensions and economic uncertainties worldwide - such as ongoing trade disputes between major economies like China and US - many countries find it essential to fortify their reserve assets through investments like these into precious metals such as gold.
"Gold has long been considered a safe-haven investment during times when traditional forms or channels may not be reliable sources for protecting one's wealth," emphasized Jessica Fung, senior economist at BMO Capital Markets in Toronto.
China's expansion of its gold reserves is not only a reflection of the country's ongoing efforts to diversify its investment portfolio but also an indication of how it intends to deal with potential financial risks that may arise amidst unstable global economic conditions.