Investing.com – Stocks have surged in recent months, but one factor could hamper further appreciation, at least in the short term: Buying from China, which has recently “filled the basket.” Last Friday, the Asian giant indicated that it had not increased its raw material reserves last month, raising uncertainties about whether this pause will continue in the coming months and whether it could affect the yellow metal rally.
An analyst from the Swiss group Julius Baer stressed in a report released to clients and the market on Monday that if China continues not to declare purchases in the coming months, this factor “could weigh on the very optimistic market sentiment of gold, leading more speculators to adjust their positions.”
Carsten Menke, head of next generation research at Julius Baer, sees the situation as a “temporary setback”, given the “strong conviction in the continuation of large purchases by central banks and a greater willingness to pay for gold, which is driven by political rather than economic factors.”
Julius Baer also warns that China has not been transparent or consistent on this topic in the past, and that with geopolitical tensions with the United States increasing, the People’s Bank of China (PBoC) is likely to return at one point increasing its gold reserves to reduce its dependence on the US dollar.
“Despite its large-scale purchases, the percentage of gold in China’s monetary reserves remains less than 5%. Compared to a global average of more than 15%, this leaves a significant advantage in terms of tonnes of gold “, concludes Julius Baer, who recalls that this market has already shown itself to be price sensitive in other purchasing periods.
Gold futures for August delivery are up 0.18% at $2,329.10 as of 9 p.m.
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