(MENAFN) Official data recently released revealed that China's central bank, the People's Bank, increased its gold reserves by 60,000 ounces in April, extending its streak of consecutive purchases to 18 months, notwithstanding significant surges in gold prices. This consistent accumulation of gold by the central bank comes amidst heightened safe-haven demand, fueled by escalating geopolitical tensions and economic uncertainties globally, alongside sustained buying activities by central banks.
The March-April period witnessed a notable uptick in gold prices, with spot gold prices reaching a record high of USD2,431.29 per ounce on April 12. This surge in prices has underscored the significance of China's gold acquisitions, with market analysts highlighting the country's role as a pivotal factor influencing precious metal prices.
Ilya Spivak, head of global macro at Tasty Live, emphasized China's significance in the current landscape, describing it as a "trump card" amidst rising precious metal prices. The data indicated that China's gold reserves reached 72.80 million ounces (approximately 2,264 tons) by the end of April, slightly up from 72.74 million ounces recorded in the previous month. Consequently, the value of China's gold reserves surged to USD167.96 billion, compared to USD161.07 billion in the preceding period.
The increased demand for gold from central banks globally has been a driving force behind the upward trajectory in gold prices over the past two years. While the World Gold Council anticipates a moderation in central bank purchases in 2024 compared to the significant acquisitions of 1,037.4 tons observed last year, the buying activity is projected to remain robust relative to pre-2022 levels.
The People's Bank of China emerged as the largest official buyer of gold in 2023, with net purchases totaling 7.23 million ounces, equivalent to 224.9 metric tons. According to the World Gold Council, this represents the highest annual volume of purchases by China since at least 1977, underscoring the country's strategic approach to diversifying its reserves amid evolving global economic dynamics.
In summary, China's persistent gold buying spree, despite record-high prices, reflects its strategic maneuvering to strengthen its reserves amidst geopolitical uncertainties and economic volatility. The central bank's continued accumulation of gold underscores its confidence in the precious metal as a store of value and a hedge against economic risks.
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