Gold rises ahead of US-China trade negotiations

China's gold reserves rose for the 10th straight month in September

The People's Bank of China has added about 100 tons of gold to its reserves since December.

"Gold continues to get appraised against the US bond yields and what the Federal Reserve is going to do next", said AxiTrader market strategist Stephen Innes in a note. Central banks have been major buyers too, especially in emerging markets.

Official purchases will likely continue as protectionist policies and geopolitical concerns add to demand, according to Suki Cooper, a precious metals analyst at Standard Chartered Bank. Russian Federation is on course to become the world's fourth largest reserve holder, largely thanks to the steady interest in buying gold. While high-level negotiations are set to resume in Washington this week, Chinese officials are signalling they're increasingly reluctant to agree to a broad deal.

The most important of which was the civil unrest in Hong Kong, the situation in the Middle East, Brexit, and the ongoing US-China trade war.

Official data showed that China's foreign exchange reserves came in at US$3.09 trillion at the end of September, an increase of US$19.7 billion, or 0.6 per cent, from the beginning of 2019.

Gold futures for December ended down $8.50, or about 0.6%, at $1,504.40 an ounce. Prior to that, the yellow metal will be at an important date with the release of the minutes of the Fed's monetary policy meeting last month to see the central bank's expectations on the future of USA interest rate cuts. The price of gold fell to the $1488 level after opening the week's trading around the $1508 resistance, and stable around the $1493 level in early Tuesday trading.

More specifically, per data released by the Central Bank of Russian Federation in September, Moscow augmented its stockpile of gold by more than $7.5 billion in one month.

China is not the only country to have been boosting its gold bullion as of late in a bid to lessen its economy's reliance on the U.S. dollar: over the first half of the year, worldwide central banks bought 374.1 tons, thereby driving total demand for the precious metal to a three-year-high, according to the World Gold Council.

China has continued to plow funds into gold as a buffer against Trump's trade war, adding 5.9 tons of the metal to its reserves in September. When the central bank announced a 57% jump in reserves to 53.3 million ounces in mid-2015, that was the first update in six years.

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