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BEIJING/LONDON, March 7 (Reuters) - China’s gold reserves were unchanged for a fourth month in February, the country’s central bank said on Tuesday, the longest time in which it has not added to its holdings since it began updating the data monthly in mid 2015.
China’s central bank bullion reserves held at 59.24 million ounces at the end of February, data on the People’s Bank of China website showed, unchanged since the end of October.
The value of the reserves rose to $74.376 billion at the end of last month from $71.292 billion at end-January, according to the data. Spot prices rose 3 percent last month to touch their highest since early November.
China may have been reluctant to build up more gold at a time when its overall forex reserves were falling, analysts said, meaning gold as a proportion of reserves was increasing without the need for additions.
The value of China’s foreign exchange reserves unexpectedly rose for the first time in eight months in February, climbing back above $3 trillion, having slipped below that closely-watched level in the previous month.
China has been a major official sector gold buyer in recent years. While central banks overall have been net buyers of gold since 2010, the level of their purchases fell to a six-year low last year, with China and Russia accounting for the bulk of additions to reserves.
Slower official sector gold buying is unlikely to have an immediate effect on gold prices, analysts said, with physical bullion demand seen as more of an underpinning factor than a driver of price levels. However, in the longer term it could mean a pillar of support for the market is weakening, they said.
“In effect, it does mean less demand for gold,” Natixis analyst Bernard Dahdah said. “Once you don’t have that floor of physical demand, prices can drop much more.” (Reporting by Beijing Monitoring Desk and Jan Harvey in London; Editing by Sunil Nair and David Evans)