gold monthly
China’s central bank did not report any gold purchases in August, maintaining its reserves at 72.80 million troy ounces. This decision to halt reported buying in May came after months of accumulation. Despite speculation that the People’s Bank of China (PBOC) had become price sensitive, no buying activity was reported.
In the months leading up to the reported halt in buys:
- In February, the PBOC purchased 390,000 ounces
- In March, they bought 160,000 ounces
- In April, 60,000 ounces were added to the reserves
Additional Insight:
- The buying trend tapered off as gold prices climbed above $2000
- Speculation remains about whether the PBOC is continuing to secretly purchase gold to diversify its reserves, especially as waiting for prices to hit $2000 again may not be practical. Concealing buying activity could help prevent front-running and ensure optimal diversification.
- Gold’s ability to rally from $2000 to $2500 without strong support from the PBOC indicates a bullish sentiment in the market
- If new gold purchases by the PBOC are reported, significant price gains could be expected
Despite the initial impact on prices when China announced the halt in gold purchases in May, the market has shown resilience, with gold prices remaining strong even in the face of recent market turmoil.
See: The very simple case for buying gold
Insight:
China’s gold reserves have significant implications for the global gold market. The country’s strategic decision to diversify its reserves can influence gold prices and market sentiment. Additionally, the opaque nature of China’s central bank operations adds a layer of complexity and speculation to the gold market, as investors closely monitor any potential buying activity by the PBOC.
