Gold daily
Gold hit a record high of $2483 before retracing and is currently trading at $2456, down $12 for the day.
Chart Analysis and Market Sentiment
Despite the pullback, technical analysis indicates that the recent reversal is not severe enough to negate the previous uptrend. Investors are now eyeing a possible retest of the old record high of $2450, which could act as a pivotal level for future price movements.
Insight into Chinese Gold Reserves
One key factor driving the gold market is China’s appetite for the precious metal. The bullish trend in gold prices began around 20 months ago when the People’s Bank of China (PBOC) started increasing its gold reserves. Recent reports suggesting a halt in gold purchases by China had initially dampened market sentiment, but gold still rallied on hopes of interest rate cuts and geopolitical uncertainties.
Recent Developments in Chinese Gold Buying
A report from Reuters revealed that China intends to raise its gold reserves to 10% from the current 4.9%, which would require an additional purchase of about $170 billion at current prices. This ambitious target represents a significant amount of gold, equivalent to approximately 70% of global annual gold production. China’s renewed interest in gold acquisitions could provide support to gold prices in the long run.
Potential Impact on Market Dynamics
The report also highlights that Chinese gold buying may no longer be price-insensitive, suggesting that the market could face challenges in maintaining price levels without continued support from China. While this development could provide a floor for gold prices, it also imposes a cap unless other buyers come in or China adjusts its purchasing strategy.
