Record prices have again kept China out of the global gold market for a third consecutive month.
Data released by the Chinese foreign exchange administration on the country’s foreign reserves at the end of July showed no increase in the country’s gold holdings. The People’s Bank of China (PBoC)’s bullion holdings remained steady at 72.8 million fine troy ounces, the same figure as at the end of April.
The PBoC halted buying in May when prices surpassed $US2,400 an ounce that month and continued to abstain from the market as prices fluctuated between approximately $US2,3100 and just over $US2,467 before surging past $US2,500 at the beginning of this month.
Up until the end of April this year, China had been acquiring gold through its central bank for 18 months, commencing in November 2022. Between November 2022 and April 2024, the PBoC reported gold purchases of 316 tonnes, bringing its gold reserves to 2,264 tonnes.
Due to the gold price rally this year, gold now constitutes 5% of the PBoC’s total reserves, the highest proportion since 1996. However, the surge in prices has prevented it from entering the market for the past three months.
Analysts suggest the central bank is unlikely to resume purchases if gold prices persist at their current elevated levels. The People’s Bank sent shockwaves through gold markets (the Comex price plummeted $US50 an ounce in a single session) when it was revealed that it did not buy in May. The reaction to the news for July and August was far more subdued. The Comex front month was down only $US1.20 an ounce at around $US2,430 an ounce on Wednesday afternoon—a level at which the PBoC is unlikely to buy anytime soon.