Mon. Jun 17th, 2024
China’s Central Bank Halts Purchases of Gold Due to High Prices

The price of gold has recently hit unprecedented levels. However, it seems that the precious metal is becoming too expensive for even the People’s Bank of China to ignore. Official data released on Friday revealed that China’s gold reserves remained unchanged in May, indicating that the central bank did not purchase any gold.

The decision by the PBOC to halt its purchases has put downward pressure on gold prices. Ewa Manthey, a commodities strategist at ING Bank, expressed her concern on Monday, stating that the current spot gold price of around $2,300 per ounce is approximately 6% lower than its peak of nearly $2,450 per ounce on May 20.

Gold prices have been rising steadily this year due to various global geopolitical uncertainties and Chinese economic instabilities. Individuals in China have been increasing their holdings as a hedge against economic instabilities and a weakening yuan. However, the recent surge in prices may affect demand temporarily.

China’s central bank began slowing down its gold purchases in April, buying only 60,000 troy ounces that month, which was a significant drop from 160,000 ounces in March and 390,000 ounces in February. The PBOC had been purchasing gold for 18 consecutive months before pausing last month. It became the world’s largest institutional buyer.

According to the World Gold Council, China’s central bank purchased a total of 225 tons of gold in 2023 alone, with Poland’s central bank coming second at 130 tons. David Tait, CEO of World Gold Council mentioned to Reuters on Monday that China is currently observing market trends and if gold prices correct to around $2,2

By Aiden Nguyen

As a content writer at newscholarly.com, I delve into the realms of storytelling with the power of words. With a knack for research and a passion for crafting compelling narratives, I strive to bring forth engaging and informative articles for our readers. From decoding complex concepts to unraveling current events, I aim to captivate and educate through the art of writing. Join me on this journey as we explore the ever-evolving landscape of news and knowledge together.

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