Gold Prices Dip, but China's Central Bank Continues 17-Month Gold Buying Streak

Continued Buying Despite Falling Gold Prices

Additional 5 Tons Purchased in March

"Reflects Strategy to Reduce Dollar Dependence"

The People's Bank of China, the country's central bank, has increased its gold reserves for the 17th consecutive month.

According to Bloomberg News on April 7 (local time), the People's Bank of China increased its holdings by 160,000 troy ounces (approximately 5 tons) last month.

Gold bar. The photo is not related to the specific content of the article. Pixabay

At the end of January, the price of gold surged to an all-time high of $5,600 per ounce. However, during the month of March, it fell by 12%, marking the largest monthly drop since 2008. Several factors contributed to this decline: geopolitical risks in the Middle East fueled a stronger dollar, and growing inflationary pressures led to expectations that the U.S. Federal Reserve would have difficulty cutting interest rates. Additionally, some investors sold off gold to offset losses in other assets, which also added to the downward pressure on prices.

As of April 7, the spot price of gold rose by about 1%, exceeding $4,690 per ounce. The news agency reported, "The market is watching the People's Bank of China's gold purchases as well as the situation with the Iran war."

The report also noted that the recent gold purchases by the People's Bank of China could help support investor sentiment, especially as some other central banks have begun selling. For example, the Central Bank of Türkiye reportedly sold about 60 tons of gold in March to defend the lira and entered into a swap agreement.

Analysts say that China's continued gold purchases are part of a long-term strategy rather than a short-term price bet. Gold is considered a key asset for diversifying foreign exchange reserves, and a hedge against geopolitical risks and currency volatility.

Lin Yan, chief macroeconomic analyst at Guolian Minsheng Securities, told the state-run English-language newspaper China Daily, "The logic of the Chinese government to reduce reliance on the dollar remains valid," adding that "this trend is supporting the long-term upward trajectory of gold prices."

In recent years, central banks around the world have increased gold purchases to diversify their foreign reserves. Notably, since Russia's invasion of Ukraine in 2022, the scale of purchases has expanded, supporting a multi-year bull market for gold. Emerging economies, in particular, have continued to increase their gold holdings as a hedge against dollar-denominated assets.

According to the World Gold Council, central banks purchased a net total of 25 tons of gold in January and February this year. The Central Bank of Poland bought 20 tons of gold in February.

This content was produced with the assistance of AI translation services.