Gold purchases by the Central Bank of China have slowed down this year due to rising world prices. After buying gold continuously since the end of 2022, the Chinese central bank did not acquire any more gold in May, ending 18 consecutive months of buying. Despite this, the country’s total gold reserves remain at 2,264 tons. However, the value of this gold increased to 170.96 billion USD at the end of May.
The PBOC’s operations have contributed to pushing world prices to a record of 2,450 USD an ounce in May, with prices increasing by 10% since the beginning of the year. However, the continuous increase in prices has caused a hesitation in demand from the Central Bank of China. As a result, there was a decrease in gold purchases by the agency, which had an impact on the global spot gold price that dropped more than 80 USD on June 7.
Central banks worldwide have been increasing their demand for gold as it provides safety, high liquidity and profitability. In fact, during the first quarter of this year alone, central banks purchased a record amount of gold with Turkey leading in acquisitions followed closely by China and India. Despite this short-term adjustment in gold prices, the long-term outlook for price increases remains unchanged as countries continue to seek safe haven assets due to global economic uncertainty and political instability.
