Gold is continuing to trade close to a three-week high of just shy of $1,120 per troy ounce as the new week gets underway. In euro terms, gold is holding its own at above €1,000 per troy ounce. In other words, gold is successfully defying the recent increase again in Fed rate hike expectations.
According to Fed Fund Futures, the market is again factoring in a 50% probability of a rate hike in September, this having dipped for a time last week to a good 30%. The Chinese central bank, the PBoC, announced on Friday that it purchased 19 tons of gold in July.
It would appear that the PBoC has gone over to reporting its (real) gold purchases monthly, rather than only every six years as it did in the past. The greater transparency makes it easier for the market to keep track of Chinese gold purchases, which previously were based only on assumptions.
"What is more, this is likely to show on a regular basis that the PBoC is a major buyer of gold. All the same, 19 tons in one month is not a particularly large amount. Given the extent of China's currency reserves and the scale of its domestic gold production, China should really have bought more gold than Russia, though this is not the case according to the current figures", says Commerzbank.
Possibly the latest market turmoil in China has somewhat slowed the gold purchases of the PBoC. Much the same was also observed in Russia at the start of the year before the purchases of the Russian central bank picked up again.
