China's Gold Buying Spree Pauses for Third Straight Month

PBOC's Absence from Market Contributes to Gold's Decline

August 7, 2024, 11:33 AM PDT

Beijing, China - In a significant development, China's central bank, the People's Bank of China (PBOC), has refrained from purchasing gold for a third consecutive month. This unprecedented move has sent shockwaves through the gold market and contributed to a decline in gold prices.

In June, the PBOC had broken its long-standing tradition of accumulating gold reserves, fueling speculation that the central bank was seeking to diversify its portfolio. However, the recent inaction suggests that the PBOC has decided to pause its gold buying spree.

Analysts attribute the PBOC's decision to several factors, including China's economic slowdown and its desire to maintain a stable currency. The central bank may also be concerned about rising inflation, as gold is often seen as a hedge against inflation.

The absence of the PBOC from the gold market has had an immediate impact on prices. Gold futures have dropped by nearly 2% on the news, as traders reassess the supply and demand dynamics in the market.

The PBOC's decision is likely to have long-term implications for the gold market. China is the world's largest consumer of gold, and its purchases have been a major factor in driving prices higher in recent years.

With the PBOC now on the sidelines, it remains to be seen how the gold market will adjust. Some analysts believe that prices could continue to decline in the near term, while others expect a more gradual correction.