China's protracted property crisis, volatile stock markets and a weakening yuan are all reasons driving money to gold, says Bloomberg:
Although China is the world's largest gold producer, it still needs to import a lot—and the quantities are only getting larger.
In the last two years, overseas purchases totaled over 2,800 tons — more than all the Gold ETF's around the world, or about a third of the stockpiles held by the US Federal Reserve— and the total amount could be even higher.
And the pace of shipments keeps accelerating. Over the first two months of the year, imports surged 53% higher than in 2023.
The People's Bank of China has been on its own buying spree for 17 straight months, its longest-ever run of purchases, as it seeks to diversify its reserves away from the US Dollar and hedge against currency depreciation.
As a sign of this surging demand, the premium buyers have to pay over international prices in China jumped to $89/oz. at the start of April. The average over the past year is $35 versus a historical average of just $7.
For sure, sky-high prices are likely to temper some enthusiasm for bullion, but the market's proving to be unusually resilient. Chinese consumers have typically snapped up gold when prices drop, which has helped establish a floor for the market during times of weakness. This time, however, there seems to be little weakness as China's appetite is helping to prop up prices at much higher levels.
That suggests the rally is sustainable and gold buyers everywhere should be comforted by China's booming demand, said Nikos Kavalis, managing director at consultancy Metals Focus Ltd.
Read the full article on Bloomberg here:
China Is Front and Center of Gold's Record-Breaking Rally
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