• PBOC expanded bullion reserves in November, it said Saturday
• Toppling of Syrian regime to further destabilize Middle East

Gold rose after China’s central bank added bullion to its reserves for the first time in seven months, and the collapse of Syria’s ruling dynasty further destabilized the Middle East.

Bullion climbed as much as 1%, after the People’s Bank of China said Saturday it bought 160,000 fine troy ounces last month. That was the first addition since April, which was the end of an 18-month run of purchases that had helped underpin prices.

The resumption of buying shows the PBOC is still keen to diversify its reserves and guard against currency depreciation, even with bullion near record high levels. Still, the volume it bought — about five tons — was relatively small compared with monthly additions earlier this year.

Market watchers also tend to be skeptical about the accuracy of declared Chinese central bank gold purchases.

“I take the Chinese six-month ‘pause’ with a pinch of salt,” said Rhona O’Connell, head of market analysis EMEA & Asia at StoneX Group Inc. “It is public knowledge that the PBOC has a history of reporting no purchases and then declaring a massive quantum leap in recorded holdings.”

Traders were also monitoring developments in Syria, after President Bashar al-Assad fled as rebel troops captured the capital Damascus. US airstrikes hit dozens of Islamic State targets in the central part of the country on Sunday as President Joe Biden cautioned that Assad’s downfall could lead to a resurgence of Islamic extremism.

“The government’s collapse in Syria could see haven demand flowing in,” according to ANZ Group Holdings Ltd. “The latest November nonfarm payroll confirms that rebalancing continued in the US, which will continue to support the Fed’s easing bias.”

Markets are focusing on the US consumer and producer-price reports due later this week, which are expected to show little increase in inflation pressures. The figures are among the last key indicators before the Federal Reserve’s meeting next week — its final policy decision before Donald Trump takes office in January. Treasury yields have drifted down as traders boosted wagers on another rate cut — a scenario that tends to benefit gold as it does not pay interest.

Gold soared to an all-time high above $2,790 an ounce in October, supported by the Fed’s pivot to monetary easing, as well as increasing haven demand on heightened tensions in the Middle East and Ukraine. Prices have eased since then, but remain 29% higher this year.

Spot gold rose 0.9% to $2,656.72 an ounce as of 12:19 p.m. in London, following a 0.4% decline last week. The Bloomberg Dollar Spot Index was steady, while silver, platinum and palladium all posted strong gains.

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