China’s Central Bank Expands Gold Reserves In November After 6-Month Pause
The flagship cryptocurrency has received a lot of attention recently as institutions and governments step up their efforts to own Bitcoin. Recently, Federal Reserve Chairman Jerome Powell and other analysts have stated that Bitcoin is not a competitor to the U.S. dollar; rather, it is a competitor to gold. Bitcoin shares many similarities with gold, including its durability, scarcity and difficulty to mine.
As part of their de-dollarization efforts, the BRICS countries have also stepped up efforts to launch their own currencies. Consideration has been given to decentralized finance leaning towards Bitcoin.
However, China does not believe in legalizing crypto entities. The country has chosen to take small steps, such as the recent regulation of virtual tokens under Hong Kong’s Stablecoin Bill. China has chosen gold as its reserve asset; in fact, by 2023, the People’s Bank of China will be the world’s largest official sector gold consumer.
In the latest development, China’s central bank expanded its gold reserves in November, ending a six-month moratorium on purchases after prices of the precious metal rose to record levels, official data from the People’s Bank of China (PBOC) showed on Saturday.
In 2023, the People’s Bank of China (PBOC) became the world’s largest official buyer of gold. China’s central bank may resume purchases after an 18-month pause in May, which could boost gold demand from Chinese investors. It is worth noting that as of the end of November, China’s gold holdings increased to 72.96 million troy ounces, up from 72.8 million ounces last month.
“The restart will send a signal that the People’s Bank of China is used to these record high price levels and is prepared to increase reserves no matter what,” said Ole Hansen, head of commodity strategy at Saxo Bank. Reuters Report.
Gold prices hit a record high in October amid rising safe-haven demand due to tensions in the Middle East and Ukraine, as well as uncertainty surrounding the recent U.S. presidential election. The metal erased some of its gains after Trump won and geopolitical tensions in the Middle East showed signs of easing.
In addition, as gold prices have risen by nearly 30% this year, Chinese consumers’ demand for gold bars has also decreased. While gold bars and coins maintained their value through the first three quarters, retail sales of discretionary items such as jewelry fell as investors sought to protect their wealth from a weakening economy.
