According to the World Gold Council (WGC), China's central bank (the People’s Bank of China) lifted increased its holdings by between 23 tonnes in July and another 29 tonnes in August.
That took purchases so far this year to well over 100 tonnes - 155 tonnes the largest by any central bank and probably helped the metal’s price rise 6.1% year to date.
That includes last week's dip of 1.2% to a close of $US1,946.60 an ounce last Friday’s settlement on Comex in New York.
The WGC data shows that global central banks added 55 tonnes to their gold reserves in July.
The People’s Bank of China (PBoC) and the National Bank of Poland both added around 23 tonnes while the Central Bank of Turkey was again among the buyers (17 tonnes). Qatar (3 tonnes), while Singapore and the Czech Republic bought two tonnes each.
The Central Bank of Uzbekistan (11 tonnes) and the National Bank of Kazakhstan (4 tonnes) were the familiar sellers in the month.
But according China's updated foreign reserve data, the People's Bank of China bought 29 tonnes of gold in August, lifting year-to-date purchases to 155 tonnes.
August’s buy was also the PBoC's biggest purchase since December, 2022.
The PBoC has been the leading central bank in the gold market this year. And its current buying spree has matched its previous 10-month run that ended in September 2019.
Some economists wondered why China was buying gold when it could be using the $US10 billion or so spent in buying gold in July and August.
The money spent is dead money, has helped gold sellers and dealers globally and done nothing to stimulate domestic demand at a time when such stimulation is desperately needed in China.
Quite a few western gold miners will be happy the PBoC is buying gold (It buys all its gold in offshore markets with US dollars and ships the metal to Beijing without leaving a trace in customs reports. Gold produced i China is mostly sold into the local domestic market via the Shanghai Gold Exchange.
Looking ahead, many analysts said that they expect China to continue to buy gold as it strengthens the yuan's international credibility to compete with the US dollar as the world's reserve currency.
"I don't think this scramble away from the U.S. dollar is going to end anytime soon,” said Edward Moya, senior market analyst at OANDA, told Kitco.
Moya noted that while central bank demand continues to support the market, prices could continue to struggle in the near term.
"What gold prices need to go higher is for global growth to slow down and bond yields to move lower,” he said.
Copper prices slipped in the wake of the poor Chinese trade data for August, losing 3.5% to end the week at $US3.71 a pound in New York.
Oil prices attracted much of the attention for another week, rising 1.4% for US West Texas Intermediate and 1.6% for Brent, the global marker after Saudi Arabia and Russia extended their 1.3 million barrels a day of production cuts till the end of 2023.
"The recent rally was sparked by the news that Saudi Arabia and Russia are extending voluntary production cuts to December,” ANZ Bank commodity analyst wrote in a Friday note. "The move will ultimately see the drawdown in inventories accelerate into year end."
WTI crude October delivery rose 64 cents to $US87.51 a barrel Friday while Brent crude for November delivery rose 73 cents to $US90.65 a barrel.
Meanwhile the number of oil and gas rigs operating in the US didn’t change last week, according to data from energy-services firm Baker Hughes.
The count for oil rose to 513 from 512 on a weekly basis while the number of gas rigs dipped by one to 113. Miscellaneous rigs increased by one to six,
Baker Hughes said a year earlier, the US had 591 oil rigs, 166 gas rigs, and two miscellaneous rigs in operation.
Overall, there were 632 rigs operating in the US last week, compared with 759 last year.
Meanwhile iron ore prices eased on Thursday and Friday from Wednesday’s six month high.
The price of 62% Fe fines delivered to northern China ended at $US113.40 on Friday on the Singapore Exchange (SGX). That was down from Wednesday’s closing peak of $US116.25 a tonne.
That saw the price of BHP shares lose 4% last week, Rio shares slipped 3.8% but Fortescue Metals Group shares closed up slightly after another week of managerial turmoil.