(Kitco Newsw) - The People’s Bank of China’s gold purchases highlight a shifting trend in the gold market, showing stable demand, albeit at lower levels. However, analysts note that central bank demand is expected to continue to create a floor in the market, supporting the current uptrend.
Citing updated foreign reserve data published at the start of the month, Krishan Gopaul, Senior Analyst, EMEA at the World Gold Council, said that China’s central bank bought two tonnes of gold in August.
After taking a six-month break last year, the PBOC has now extended its renewed buying spree to ten consecutive months.
In his social media post, Gopaul noted that China’s official gold reserves stand at 2,302 tonnes. However, these reserves still represent less than 7% of the country’s total foreign reserves.
While China remains an active player in the gold market, the data shows that purchases have slowed, falling by more than half compared to the start of the year, which was already sharply lower than in early 2024.
In an interview with Kitco News, Philip Newman said that higher gold prices could impact central bank purchases. However, he added that central banks are less concerned about price levels than traditional investors.
Last month, gold prices traded in a fairly narrow range around $3,300 an ounce. Last week, gold broke out of five months of consolidation and continues to show strong momentum. Spot gold last traded at $3,615.20 an ounce, up nearly 1% on the day.
Without addressing any specific central bank purchasing program, Newman said that although buying may slow, he doesn’t expect the trend to end anytime soon.
Analysts have noted that the weaponization of the U.S. dollar and growing uncertainty over the Federal Reserve’s political independence continue to prompt central banks to diversify away from dollar reserves.
