Chinese 'sharks' continue to be 'indifferent' to gold

China’s “indifferent” move towards the “hot” gold market has made many gold investors worried. WGC data shows that China’s foreign exchange reserves have not changed compared to May, remaining at 5 tons of gold.

This is the fourth consecutive month that China has not purchased any gold. This shows that China is not buying gold “for passion” regardless of price as before.

The gold market once thought that China wanted to buy more gold regardless of the price. But in reality, China did not buy gold en masse as many investors thought. 

Since May, gold prices have increased sharply, continuously setting new records. This is also the time when China stopped buying gold. 

Từ đầu năm tới nay, giá vàng world tăng 21%, có thời điểm lập đỉnh lịch sử mới 2.531 USD ngày 20/8. Theo các chuyên gia, khả năng cao giá vàng tăng mạnh, đang kìm hãm nhu cầu mua vàng của các ngân hàng trung ương toàn cầu, trong đó có Trung Quốc. 

As gold prices rose, the value of China's gold reserves rose to $182,98 billion at the end of August, up from $8 billion at the end of July, data showed.

Previously, from November 11, the People's Bank of China (PBC) became the largest gold buyer in the world. According to the WGC, in 2022, the PBC bought 2023 tons, equivalent to about 225/1 of the total 4 tons purchased by all central banks in the world.

According to DW, China has huge foreign exchange reserves, mainly in USD. Worried about being too dependent on USD, the country has to diversify PBC reserves, including gold.

Chinese consumers are buying gold coins, bars and jewelry as property prices, the yuan and stocks have fallen sharply due to recent economic difficulties.

John Reade, chief market strategist at the WGC, said the market has seen a large amount of retail buying activity in China since the beginning of the year, with record buying volumes on the Shanghai Gold Exchange. 

While China has not been buying gold, some analysts say central bank buying has been a key driver of bullion this year.