(Kitco News) – China’s central bank added gold to its reserves for the 17th straight month in March, but the increase was the smallest since the streak began in November 2022, according to official data released Sunday.
The People’s Bank of China announced that they increased their gold holdings by 0.2% to 72.74 million troy ounces last month, with record-high prices likely discouraging them from heftier purchases. Spot gold went on quite a run during the month, climbing from $2,040 per ounce on March 1 to a new all-time high above $2,265 by March 31.
Central bank buying has been a significant driver of gold’s price gains since the Russian invasion of Ukraine in 2022, and China has led the sovereign buying during that period. High prices have dampened demand in recent months, however, with sovereign gold purchases declining 58% month-over-month in February.
China’s net gold imports from Hong Kong fell 48% in February, with net imports from the Special Administrative Region coming in at 39.826 metric tons, data from the Hong Kong Census and Statistics Department showed, far lower than the 76.248 tons imported in January and the lowest level since November 2023.
While the low February numbers could also have been impacted by the Lunar New Year holidays, which shuttered markets and stopped most business activities between Feb. 10-17, the March figures confirm the downward trend in China’s sovereign purchases.
But many experts still believe that the last 17 months represent a fundamental shift in the gold market away from the West and to the East, and to China in particular, and that trend is not expected to reverse any time soon.
Canadian mining legends Frank Giustra, CEO of Fiore Group, and Pierre Lassonde, Chairman Emeritus at Franco-Nevada, said in a recent panel with Kitco News that the West has lost its power to set the price of gold, and warned of a new geopolitical reality dominated by resource nationalism.
“The world hasn't woken up yet,” Lassonde told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, during Kitco Insights Interactive Mining Titans' Power Panel. “The marginal buyer of gold is no longer the U.S. It's no longer Europe. It's China. Between the country's central bank and the Chinese public, China takes up over two-thirds of all the annual production.”
“They are the new marginal buyer,” he said. “That's where the gold price is set.”
