Gold prices have decreased in China as the People’s Bank of China (PBOC) has put a pause on its gold buying. This is because gold prices reached record highs, and the high cost of the precious metal made it unaffordable for even the PBOC to continue its purchasing streak. The pause in purchases by the PBOC has left gold vulnerable to potential further declines, according to commodities strategist Ewa Manthey.
The central bank of China had begun to slow its gold purchases in April, with a significant decrease in the amount bought each month. Despite being a traditional safe-haven asset, gold’s record-breaking rally may dampen demand for the metal in the short term. The current benchmark spot gold price is approximately $2,300 per ounce, which is 6% lower than its record high in May.
According to the World Gold Council, if prices drop to around $2,200 per ounce, China may resume its purchases as it was previously the world’s largest institutional buyer of gold, acquiring 225 tons in 2023. However, this pause has left investors uncertain about whether or not China will continue buying gold at these high prices.
