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    China's Central Bank Suspends Gold Buying for Second Month

    Giann Liguid
    Jul. 09, 2024 12:30PM PST

    China's central bank held off from increasing its gold reserves for the second consecutive month, citing the yellow metal's recent volatility.

    Five stacks of gold bars ascending in height.
    Pla2na / Shutterstock

    The People’s Bank of China (PBOC) revealed on Sunday that it did not purchase gold in June after doing the same in May.

    Since setting a record high of US$2,450 per ounce in May, gold prices have been volatile. Gold started July at about US$2,330 before rallying 3 percent last week to US$2,390, marking the most significant weekly gain in three months.

    However, it fell back down following the news of the PBOC's decision to hold off on bullion purchases.


    Prior to its lack of purchases in May, the PBOC had purchased gold each month since January 2023. As of June, the PBOC's gold holdings total 72.8 million troy ounces, or 2,063 metric tons (MT).

    In contrast to the PBOC, the Reserve Bank of India reportedly increased its bullion reserves by over 9 MT in June, marking the most significant monthly addition in nearly two years and bringing India's total gold reserves to 841 MT

    Central banks globally have been key drivers of gold demand. According to the World Gold Council's Q1 2024 report, central bank net demand for gold reached 290 MT in the first quarter, the highest Q1 total in their data series since 2000.

    This demand was spread among many countries. Central banks in East and Central Asia, including China, Turkey and India, accounted for the majority of net purchases in Q1 2024.

    Market specialists have held that China’s pause in gold acquisition can be expected following rallying gold prices.

    Christopher Wong, a foreign-exchange strategist at Oversea-Chinese Banking, told Bloomberg, "(I)t is not uncommon for China to temporarily halt purchases, given that gold prices have rallied quite sharply.”

    “It appears that gold prices remain a little too high and the PBOC is waiting for a further pullback before resuming its gold purchasing programme,” Nitesh Shah, a commodity strategist at WisdomTree, told Reuters.

    As of 4:00 p.m. PDT on Tuesday (July 9), the spot gold price stood at US$2,364.

    Don’t forget to follow us @INN_Resource for real-time news updates!

    Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

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    The Conversation (1)
    Mark Pepper
    Mark Pepper
    10 Jul, 2024

    China suspending buying gold for the second month is just B.S.. There are doing this to get the price of gold to go down.

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    Giann Liguid

    Giann Liguid

    Writer

    Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.

    When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.

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    Giann Liguid
    Giann Liguid

    Writer

    Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.

    When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.

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