China holds off gold purchases with 72.8 million per ounce in reserves
PBOC's $199B gold reserve value stirs speculation
China’s central bank has held off on gold purchases for the sixth month and this is stirring curiosity in financial circles. Given the People’s Bank of China (PBOC) sitting at 72.8 million troy ounces in reserves, this choice seems strategic, especially with gold’s 33% rally this year, the highest in four decades. The PBOC’s holdings rose in value, hitting $199.06 billion by October’s end, from $191.47 billion the month prior, showing off the importance of its existing reserves. While some interpret the pause as a response to high bullion prices, others believe this may be a temporary pause rather than a change in strategy.
This holding pattern in China contrasts with other central banks, which have maintained or increased their reserves since the start of 2022, partly driven by economic shifts and rising geopolitical risks. The trend was especially notable after the Ukraine conflict when central banks diversified away from U.S. dollar assets. According to the World Gold Council, while gold purchases by central banks may be slow in 2024, levels are above pre-2022 numbers. The consistent demand reflects gold’s value as a stable reserve asset in uncertain times, a sentiment likely to keep gold in demand.
China’s strategy is unique, given that the PBOC built an 18-month streak of gold buying before pausing in April. Commodity strategist Nitesh Shah from WisdomTree suggests China’s absence in recent months may signal it’s waiting for prices to ease. However, he notes that the PBOC is likely still committed to accumulating gold in the long term. The strategy reflects China’s careful approach amid high global prices, balancing caution with value.
China's fiscal policy and economic stimulus on the outlook
Investors are closely watching upcoming policy discussions in China’s National People’s Congress for clues on fiscal moves that might affect gold buying. Additional economic stimulus could spur the PBOC to reenter the gold market, especially if prices stabilize, creating fresh demand pressure.
For now, gold hovers around $2,700 per ounce, showing signs of resilience despite recent pullbacks driven by dollar strength and rising U.S. yields. A rise above the $2,750 resistance and the 100-day EMA could signal renewed bullish momentum as traders gauge central bank demand and broader economic trends.
Gold safe-haven status tested as U.S. election results spark 3% dip. The yellow metal plunged 3% after Trump’s re-election set off waves across global markets.
