China Resumes Gold Purchases Amid Record Prices
In a significant move, China has resumed its gold purchases after a six-month pause, with the People's Bank of China (PBOC) adding 160,000 ounces to its reserves in November. This increase brings China's total gold reserves to 72.96 million ounces, according to official data released on December 8, 2024. The PBOC's actions reflect a sustained strategy to diversify its reserves and safeguard the economy against potential currency devaluation, particularly in the context of historically high gold prices.
Impact of Global Events on Gold Prices
Gold prices reached a record peak last October, driven by heightened demand for safe-haven assets amid geopolitical tensions in the Middle East and Ukraine, coupled with uncertainties surrounding the US presidential election. However, following Donald Trump's election victory and a relative stabilization in the Middle East, gold prices have experienced a slight retreat. Despite this, gold prices have surged nearly 30% since the beginning of the year, indicating a robust market.
Changing Consumer Behavior in China
The rising gold prices have influenced consumer behavior in China, where demand for jewelry and luxury goods has declined. Conversely, sales of gold bars and coins have remained strong throughout the first three quarters of the year. This trend suggests that investors are increasingly looking to gold as a means of protecting their wealth amid a slowing local economy.
