According to gold market and geopolitical analysts, China's domestic investment mechanism crisis and geopolitical factors are fueling the rise in global gold prices. Ross Norman, CEO of London-based precious metals platform MetalsDaily.com, believes China has played a key role in the recent price rally that has pushed gold prices to $2,500 an ounce. I believe.
Norman said in a statement to the New York Times:
There is no doubt that China is the driving force behind the gold price. The flow of gold to China has gone from flat to absolute.
Part of the increase in demand is due to a decline in China's real estate sector, with investors looking for alternative options for allocating their funds. Domestic gold demand in Q1 2024 increased by 6% compared to Q1 2023. Over the past year, this figure has increased by 9%, showing continued demand.
Additionally, the rise in precious metal prices was supported by continued demand from the People's Bank of China (PBOC), which has been increasing its gold reserves for 17 months. Guan Tao, chief global economist at the International Bank of China in Beijing, said the imminent threat of U.S. sanctions played a role in the People's Bank of China's actions.
Tao explained that China currently uses foreign currency to purchase gold, which increases gold reserves and reduces US dollar reserves at the same time. Previously, China paid locally in Chinese yuan.
"We think this gold rally may be different from past ones," Tao said, adding that factors not previously associated with gold price increases are at play..