(Yicai) March 9 -- China’s central bank increased its gold reserves for the 16th consecutive month in February as escalating geopolitical tensions kept the price of the safe-haven asset near historic highs.

The People’s Bank of China held 74.2 million ounces of gold at the end of last month, worth about USD387.6 billion, up 30,000 ounces from the end of January, according to data released by the State Administration of Foreign Exchange recently.

Since November 2024, the PBOC has raised its gold holdings by a total of 1.4 million ounces.

At the end of last month, the United States and Israel launched military operations against Iran, sharply worsening tensions in the Middle East. Amid the escalating conflict, gold prices have fluctuated significantly in recent weeks, exceeding USD5,400 per ounce on March 2 before falling sharply and hovering around USD5,100 today.

Before that, gold prices repeatedly hit record highs in late January, once approaching the USD5,600-per-ounce mark.

The impact of geopolitical conflicts on gold prices initially manifests as a risk premium driven by emotional shocks, according to a research report by China International Capital Corporation. Over the medium term, as uncertainties are gradually absorbed, risk appetite may recover, and investors’ focus will shift back to economic fundamentals and macro policies, the report noted.

After the emotional shock subsides, what will ultimately affect asset performance are the substantive changes geopolitical conflicts bring to the global industrial chain and the broader macroeconomic environment, CICC added.

As of the end of February, China’s foreign exchange reserves stood at USD3.4 trillion, up USD28.7 billion from the end of January and marking the seventh consecutive monthly increase. The rise was mainly driven by exchange-rate conversion effects and asset price changes resulting from the strengthening US dollar index, SAFE said.

Editor: Emmi Laine