The purchase of gold by the Chinese central bank, coupled with the devaluation of the Chinese currency, the insipid local stock market and the ailing real estate sector, has also encouraged Chinese consumers to buy gold to protect the value of their assets.
China led record levels of gold purchases by central banks in the first nine months of the year, as countries try to protect themselves from inflation and reduce dependence on the US dollar.
In total, central banks around the world purchased 800 tonnes between January and September, a 14% increase from the previous year, according to a report from the World Gold Council, an industry group.
Galloping inflation and the depreciation of many countries’ currencies have triggered a rush to gold as a store of value. This dynamic was also motivated by the desire of countries to reduce their dependence on the dollar as a reserve currency, following the sanctions imposed by Washington against Moscow, according to analysts.
China stood out as the biggest buyer of gold this year. The People’s Bank of China (central bank) said it had acquired 181 tons in the first nine months of 2023. The precious metal now makes up 4% of the Asian country’s reserves.
Poland, with 57 tons, and Turkey, with 39 tons, were, respectively, the second and third largest buyers in the third quarter.
The volume of purchases by central banks surprised analysts, who expected a slowdown in relation to the record values reached last year. These concerns were reinforced by the conflict that broke out in the Middle East between Hamas and Israel, which raised the price of gold by almost 10% in a period of 16 days.
The purchase of gold by the Chinese central bank, coupled with the devaluation of the Chinese currency, the insipid local stock market and the ailing real estate sector, has also encouraged Chinese consumers to buy gold to protect the value of their assets.
These factors have helped keep gold prices near their all-time high of $2,072 per troy ounce (equivalent to 31.1 grams), despite investors increasingly believing that the US Federal Reserve will maintain interest rates. “higher for longer”.
