PBOC Halts Gold Buying in May
The People’s Bank of China (PBOC), China’s central bank and the largest buyer of gold globally, made headlines when data revealed that they purchased no gold in May 2024.
In May 2024, gold prices reached a record high, prompting the PBOC to halt its reserve buying activities. This came as a surprise since the Bank had been consistently buying gold for the past 18 months.
Decline in Purchases
China’s gold purchases saw a decline leading up to May:
- In February, the PBOC purchased 390,000 ounces
- In March, 160,000 ounces
- In April, 60,000 ounces
- In May, no purchases were made
The lack of buying in May seemed to dampen the rally in gold prices, and the news on Friday further impacted the market sentiment.
Future Outlook
Despite the pause in May, analysts believe that the PBOC’s halt in buying should be seen as temporary, indicating that the Bank is likely not finished with its gold acquisitions. Technical charts show support around USD2275-80, suggesting a potential rebound in prices in the future.
Additional Insight:
Gold is often considered a safe-haven asset, and central banks, like the PBOC, use it to diversify their reserves and hedge against economic uncertainties. The PBOC’s actions in the gold market can provide valuable insights into the global economic landscape and investor sentiment towards the precious metal. The fluctuation in gold purchases by central banks can also impact gold prices and market dynamics, making it essential to monitor their activities closely.
