Key information
- China’s central bank resumed buying gold for its reserves in November.
- The value of China’s gold reserves declined to $193.43 billion at the end of last month.
- Spot gold prices have seen a significant increase of 28 percent since the start of the year despite the current market slowdown.
After a six-month break, China’s central bank resumed buying gold for its reserves in November. This information was disclosed on Saturday by the People’s Bank of China (PBOC). Prior to this pause, the PBOC was the world’s largest public sector gold buyer in 2023. The resumption of purchases could potentially support demand from Chinese investors, which has weakened since the PBOC paused its buying streak of 18 months in May.
China’s gold holdings increased to 72.96 million fine troy ounces at the end of November, a slight increase from the previous month. However, the value of China’s gold reserves declined to $193.43 billion at the end of last month, from $199.06 billion at the end of October. This drop in value coincided with a fall in global gold prices in November, marking the first monthly decline since June.
Gold prices and reserves
Despite this recent decline, spot gold prices have still seen a significant increase of 28 percent since the start of the year, although they are currently down 5 percent from their record high. of $2,790.15 per ounce reached on October 31. On Friday, the spot gold price closed at $2,633.50 per ounce.
Ole Hansen, head of commodities strategy at Saxo Bank, said the resumption of purchases indicates that the PBOC is comfortable with these high price levels and is prepared to continue adding to its reserves regardless.
-Market reaction
The Chinese central bank’s resumption of gold purchases could have a positive impact on investor sentiment, as it could indicate that other major players are also committed to holding gold in their reserves. This news could lead to an increase in demand for gold, which, in turn, could push up prices. However, the market reaction will depend on various factors, including global economic conditions and the performance of other asset classes.
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