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- China bought nearly 10 tons of gold in July, adding to its eight-month buying streak and bringing its reserves to 62.26 million ounces — about 1,945 tons.
- Gold acts as a safe haven for investors, as its value typically rises during times of economic weakness and market volatility.
- The purchase is another signal from China that its prepping for a prolonged and escalated trade war with the US.
- The nation already recnetly let its currency fall to 11-year-lows and threatened to stop purchasing American agricultural products.
- Watch the price of gold per ounce update live here.
China bought nearly 10 tons of gold in July, marking the eighth consecutive month the country increased its reserves, Bloomberg reported Wednesday morning.
The purchase is another signal from China that its gearing up for a prolonged trade conflict with the US. Gold serves as a historic safe haven investment, and its price typically rises when markets and other currencies see increased volatility or prolonged weakness.
China is likely buying gold to diversify its holdings away from the US dollar and hedge against harm from the trade war, analysts from Societe Generale said in a Tuesday note.
"The growing threat of a currency war in recent days could add to this momentum and prove an overall tailwind for gold," the team led by Alain Bokobza said.
The precious metal costs about $1,500 per ounce as of 12:00 p.m. ET Wednesday, trading at a six-year high as global economies slow and central banks cut interest rates.
China now holds 62.26 million ounces — about 1,945 tons — of gold, according to data from the People’s Bank of China. The sum is worth approximately $93.4 billion at current prices. The country has added about 94 tons of gold to its reserves in the last eight months.
The move is one of several from China to protect itself from trade-war fallout. The nation allowed its currency to breach a key psychological level Monday before a slight reversal to bring the yuan just under seven-per-dollar. President Trump deemed the move "currency manipulation" and called on the Federal Reserve to cut rates in an effort to boost the US economy. The Treasury Department officially declared China a currency manipulator shortly after Trump’s tweet.
China also failed to reach a trade deal with the US during talks in Shanghai by July 31. Trump escalated the trade conflict the following day, announcing on Twitter the US would hit China with 10% tariffs on about $300 billion worth of imports. The US already subjects about $250 billion in Chinese goods to a 25% tariff.
China responded Monday by reneging on its plans to buy US agricultural goods and said it may levy additional tariffs on recent purchases.
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Source: Business Insider – bwinck@businessinsider.com (Ben Winck)