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On July 7, the State Administration of Foreign Exchange statistics showed that as of the end of June, my country's gold reserves were 72.8 million ounces, the same as at the end of May, and remained unchanged for two consecutive months. In May this year, against the backdrop of rising international gold prices, the People's Bank of China ended its "18 consecutive increases" since November 2022 and suspended its gold reserves.

Regarding the central bank pressing the "pause button" on gold reserves, industry insiders said that the main reason was that the international gold price has remained in a historically high range this year, and the central bank chose to stop increasing its gold reserves due to considerations of the high gold price, changes in market expectations, and the need to control costs.

In recent months, the international gold price has continuously refreshed historical records and hovered at a high level, and the premium risk associated with buying gold has increased. The recent uncertainty in the pace of the Fed's interest rate cuts and the frequent fluctuations in the US dollar index have had an important impact on the trend of gold prices. As of the close of July 5, the New York gold futures price closed at $2,399.80 per ounce, up 1.28%. The international gold price has risen to its highest level in a month. Wang Qing, chief macro analyst at Orient Securities, said that the current gold price is at a historical high, and the central bank's appropriate adjustment of the pace of increasing holdings will help control costs.

"At present, the international gold price is already at a high level, and the probability of price fluctuations and adjustments in the short term is increasing." Pang Ming, chief economist of JLL Greater China, believes that under this background, the central bank's suspension of gold holdings reflects the central bank's efforts to seek a balance between adjusting and optimizing the structure of the international reserve portfolio, ensuring the preservation, appreciation and returns of reserve assets, and reducing the risk and volatility of the asset portfolio.

Wu Dan, a researcher at the China Banking Research Institute, said: "At present, my country's gold reserves rank sixth in the world, and it has increased its gold holdings by 10.16 million ounces for 18 consecutive months. The cumulative increase is already large. At this time, the central bank of my country temporarily stopped buying gold and adjusted the pace of increasing its gold reserves in order to reasonably control costs and avoid potential risks. It reflects the foreign exchange reserve management strategy of 'stability first', which is of great significance to the security of my country's foreign exchange reserves and the stability of profitability."

Liang Yonghui, deputy general manager of Shandong Zhaojin Gold and Silver Refining Co., Ltd., believes that the suspension of gold holdings is based on a prudent judgment of the current market situation and a forecast of future development trends. The central bank aims to achieve optimal allocation of reserve assets and risk control by flexibly adjusting the pace and scale of holdings to better cope with the uncertainty of the global economy.

Although the central bank has stopped increasing its gold holdings, many industry insiders believe that the central bank is still expected to further increase its gold allocation in the long run. "From the perspective of continuously optimizing the international reserve structure and steadily and prudently promoting the internationalization of the RMB, the central bank's increase in gold holdings is still the general direction in the future," said Wang Qing.

At present, China's gold reserves rank sixth among countries in the world, but account for a small proportion of foreign exchange reserves. "Against the backdrop of 'de-dollarization', countries such as India and Turkey continue to increase their gold reserves, and the overall trend of global gold hoarding for risk aversion has not changed. my country's central bank will also maintain the general direction of increasing its gold reserves, providing a strong backup force for enhancing core competitiveness, foreign exchange reserve asset security, balance of international payments and exchange rate stability." Wu Dan believes.

Pang Ming said that considering the advantages of gold in hedging, anti-inflation, and long-term preservation and appreciation of value, the policy motivation of my country's central bank to add and dynamically adjust gold reserves in the international reserve portfolio has not changed, and the general direction and long-term trend of continuing to increase gold holdings have not changed.

In addition, the "2024 Central Bank Gold Reserve Survey" recently released by the World Gold Council also shows that among the 70 global central banks surveyed from February 19 to April 30 this year, 81% of the central banks surveyed said that the global central banks' gold holdings will increase in the next 12 months. This proportion has reached the highest level since the survey was launched in 2019. (Economic Daily reporter Ma Chunyang)