FX.co ★ China suspends its massive gold purchases

Surprisingly, the authorities in China have halted their gold purchases. According to official data published on November 7, the People's Bank of China (PBOC) has not bought any gold for its reserves for six consecutive months. In the meantime, other major central banks pump up their gold vaults at a brisk pace.

By the end of October, China's gold reserves stood at 72.8 million troy ounces. Therefore, the value of these reserves increased from $191.47 billion in September to the current $199.06 billion.

Analysts estimate that the precious metal surged by nearly 33% in value in 2024, marking the largest annual gain since 1979. Experts attribute this rise to several factors: the start of an interest rate-cutting cycle by the Federal Reserve, geopolitical tensions, and strong demand from central banks.

The World Gold Council predicts that gold purchases by global central banks, which expanded from 2022 through 2023, may decrease by the end of the current year. This slowdown is partially due to the PBOC halting its 18-month streak of gold purchases in May.

Another month without purchases from China indicates that the central bank is waiting for a better price to replenish its gold reserves, Nitesh Shah, currency strategist at WisdomTree, remarked.

Interestingly, gold made up 5.7% of the PBOC’s total reserves by the end of October, compared to 4.9% in April 2024. Many investors are now anticipating new fiscal stimulus measures from the Chinese authorities.