China Remains Absent from World Gold Market for Second Consecutive Month
In June, for the second month in a row, high world prices continued to keep China out of the world gold market. Despite prices falling by $100 USD per ounce from all-time highs in May, data on China’s foreign reserves and their composition released by the government on Sunday revealed no increase in gold holdings for the country.
The People’s Bank of China (PBoC) did not make any gold purchases in May when prices reached an all-time high of $2,454 USD per ounce on the Comex futures market. This news may disappoint those who anticipated China’s entry back into the market following the price drop.
Unchanged Gold Reserves and Value Fluctuation
The report on Sunday indicated that China’s gold reserves remained stagnant for the second consecutive month at 72.8 million troy ounces, following 18 consecutive months of purchases up to April. However, the value of these reserves decreased to $169.70 billion USD in June from $170.96 billion USD in May due to the lower gold prices during the month.
Gold Prices in July and Market Outlook
As of the first week of July, the price of gold stood at $2,399.80 USD per ounce on Comex, reflecting an increase of $60 USD per ounce from the June 28 price of $2,339 USD per ounce. The World Gold Council recently highlighted in a mid-year assessment that gold is seeking a catalyst to sustain its momentum in the second half of the year.
Potential Factors Affecting Gold Performance
The Council noted that gold has shown strong performance so far in 2024, with a 12% year-to-date increase (15% in AUD) outpacing most major asset classes. Looking ahead, the Council pointed out that gold and the global economy are in search of a catalyst to drive further growth.
While falling rates and escalating market and geopolitical risks could attract additional Western investment in gold, the Council cautioned that a significant decline in central bank demand or widespread profit-taking by Asian investors might hinder gold’s performance. These factors could influence the future trajectory of gold prices and market activity.
