(Yicai) June 8 -- China's foreign exchange reserves rose for the second straight month in May, reflecting the country’s steady economic performance, while its gold holdings rose for the third month in a row.

China’s forex reserves increased by 0.9 percent, or USD317 billion, to USD3.4422 trillion in May, the State Administration of Foreign Exchange announced yesterday. The central bank’s gold reserves rose by 32,000 troy ounces to 74.96 million t oz, even as the price of the precious metal fell for a third consecutive month on international markets.

Global stock markets climbed last month on the back of the artificial intelligence investment boom, offsetting the negative valuation impact on China’s reserves from moderately lower US Treasury prices and a stronger US Dollar Index, according to Wang Qing, chief macro analyst at Golden Credit Rating.

The US Dollar Index is a measure of the greenback's value relative to a basket of other currencies.

The broad run-up in prices of major global financial assets also had a positive effect on the size of China’s forex reserves, said Pang Ming, a distinguished senior research fellow at the National Institute of Finance and Development.

Even though gold prices remain near historically high levels, purchases still make sense for improving the structure of China’s international reserves, Wang said. The metal accounted for only about 8.8 percent of China’s international reserves at the end of last year, far below the global central bank average of 27 percent, he noted.

China’s gold share is still relatively low and leaves room for further accumulation. In his view, additional gold purchases by the central bank could also strengthen confidence in the sovereign currency and support the cautious, gradual internationalization of the renminbi.

China still has ample room to buy more gold, Wang said. Further purchases by the central bank could also bolster confidence in the sovereign currency and support yuan internationalization, he added.

Editors: Tang Shihua, Martin Kadiev