China’s Central Bank Halts Gold Purchases Due to Price Increase

China Pauses Gold Buying Streak, Leaving the Market Vulnerable to Further Declines”.

The People’s Bank of China (PBOC) has decided to pause its gold buying streak due to the rising price of the precious metal. According to official data released on Friday, China’s gold reserves remained unchanged in May, indicating that the central bank did not make any purchases. This decision by the PBOC has left gold vulnerable to further declines in value, according to Ewa Manthey, a commodities strategist at ING Bank.

The current spot gold price is approximately $2,300 per ounce, which is 6% lower than the record high of nearly $2,450 per ounce on May 20. Despite the significant increase in gold prices this year, driven by global geopolitical tensions, the PBOC’s decision not to buy gold has had an impact on demand. People in China have been purchasing gold as a hedge against economic uncertainties and a weak Chinese yuan, contributing to the surge in gold prices.

In April, the PBOC’s gold purchases began to slow down significantly compared to previous months. Only 60,000 troy ounces were bought in April compared to 160,000 ounces in March and 390,000 ounces in February. This marked a break from the central bank’s streak of buying gold for over a year and a half, during which time it became the world’s largest institutional buyer of gold. In total for 2023, China’s central bank purchased over 75 tons of gold surpassing other buyers like Poland’s central bank which bought around 138 tons.

David Tait, CEO of World Gold Council stated that China is currently monitoring the situation and waiting for prices potentially correcting around $2,257 per tonne before resuming its purchase activity again.” If prices reach this level or below,” he said “it may be possible for China’s central bank may resume its buying activity.” This suggests that while it may not be permanent decision but rather strategic one based on market conditions.

Leave a Reply

Emilie Barriau Named Chief Technology Officer at Hempel Previous post Hempel’s New Chief Technology Officer Emphasizes Innovation for a More Sustainable Future
Examining Important Health Screenings for Men Next post James Williams Jr.’s Cancer Diagnosis: Why Men of All Ages Must Prioritize Regular Health Screenings