China's gold holdings rose for two months as December forex reserves fell 1.94%.

In December 2024, China's central bank continued its trend of increasing its gold reserves, marking the second consecutive month of this effort following November. According to data released by the State Administration of Foreign Exchange on January 7, by the end of December, China's gold reserves reached 73.29 million ounces, up from 72.96 million ounces at the end of November. This signals China's renewed focus on its gold reserves after a six-month hiatus.

Meanwhile, China's foreign exchange reserves saw a decline in December. By the end of December 2024, the country's foreign exchange reserves stood at $3,202.36 billion, a decrease of $63.5 billion month-on-month, marking a 1.94% drop. The State Administration of Foreign Exchange explained that the decline was mainly due to fluctuations in global financial asset prices caused by expectations of monetary policy from major economies, macroeconomic data volatility, and the rise of the US dollar index. The combined effects of exchange rate conversion and asset price changes contributed to this development.

Nevertheless, the State Administration of Foreign Exchange emphasized that China's economy remains generally stable, with steady progress and a continuing trend of high-quality development, providing a solid foundation for the long-term stability of foreign exchange reserves.

Globally, in 2024, gold prices reached a historic high driven by increased risk aversion and central banks' gold acquisitions. Spot gold prices climbed to $2,644.27 per ounce. However, following Trump's victory in the US election, the dollar was boosted, and the gold price rally lost some momentum. This week, Goldman Sachs adjusted its gold price forecast, delaying their target of reaching $3,000 per ounce by the end of 2025, citing potentially smaller rate cuts by the Federal Reserve than previously expected.

Looking ahead, analysts believe that the global gold price trend will be influenced by the Federal Reserve's monetary policy, the US dollar's trajectory, and geopolitical factors. Despite the current weakening momentum for gold price increases, the long-term allure of gold as a safe-haven asset persists, particularly amidst rising global economic uncertainties.

This wave of gold acquisitions and changes in foreign exchange reserves reflect China's strategic diversification of asset allocation in a complex international financial environment. It also offers a crucial perspective for global markets, focusing on how future monetary policies and asset price changes will continue to shape the international market landscape.

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