A female consumer shops for gold jewelry in Hohhot,North China's Inner Mongolia Autonomous Region on March 7,2023. Photo: VCG

China increased its gold reserves for the sixth consecutive month in April to 66.76 million ounces (1,893 tons) amid a global financial panic triggered by aggressive US interest rate hikes on top of its ongoing banking crisis. 

Experts said that gold is still a safe haven for international capital wanting to hedge against uncertainties amid concerns over a global recession, high inflation and other risks. 

China's gold reserves grew 260,000 ounces month-on-month, data from the People's Bank of China showed on Sunday, with 4.12 million ounces of gold being purchased since November 2022. 

Central banks across the world continued to buy gold in the first quarter, adding 228.4 tons to global reserves, up 176 percent year-on-year, data from the World Gold Council (WGC) showed on Friday. 

The momentum from central banks showed that global investors have further lost trust in holding US dollar assets, leading to a sell-off of these assets and a rush to purchase gold, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Sunday. 

International funds have flocked to gold as a safe haven, as the global financial market highly fears more risks will emerge in the US banking sector, represented by the latest failure of First Republic Bank, Liang Haiming, dean of Hainan University Belt and Road Research Institute, told the Global Times on Sunday.

The Fed announced on Wednesday plans to further lift interest rates by one-quarter of a percentage point, marking the 10th hike of the current cycle. 

The report from the WGC noted that China has seen a strong relief rally in the first post-COVID quarter of unfettered consumer spending, adding that the economic recovery and healthy income growth reignited domestic consumption and the eye-catching gold prices spurred investment interest.

Liang said that China will need to invest in more gold amid the yuan's increasing internationalization, as the nation's gold reserves will remain a solid foundation to support the process. 

China raised foreign exchange reserves to $3.20 trillion as of the end of April, some $20.9 billion more than in March, data from the State Administration of Foreign Exchange (SAFE) revealed on Sunday.

Affected by monetary policy and expectations for major economies, the US Dollar Index fell and the prices of global financial assets climbed, read the notice from the SAFE, attributing the increase in foreign exchange reserves to the combined impact of currency translation and asset price changes.

The SAFE said that the nation's efforts to promote high-quality development and the rebound in domestic economic development both favor general stability in China's foreign exchange reserves.

The rise in foreign exchange reserves reflects the nation's booming exports and growing inflows of foreign investment, which go directly into foreign exchange reserves, according to Dong, indicating that international institutions and investors are bullish on China's economic recovery.