China’s central bank, the People’s Bank of China (PBOC), has put a temporary halt to its gold accumulation for the second consecutive month, maintaining its reserves at 72.8 million troy ounces. This break marks the end of an 18-month period of continuous gold purchases that started in November 2022 and contributed to the record-breaking prices of gold.
The PBOC's decision to refrain from increasing its gold reserves in June was reported by the World Gold Council. According to official data, the bank's holdings of bullion remained unchanged at 72.8 million troy ounces by the end of the month, amounting to a total of 2,264 tonnes.
The pause in gold accumulation by the Chinese central bank began in May, bringing an end to the 18-month streak of consistent monthly purchases that had started in November 2022 and played a significant role in driving up gold prices to unprecedented levels. This decision to temporarily halt gold purchases may have been influenced by various factors. Market analysts suggest that the PBOC could be adjusting its strategy in response to the fluctuating global gold prices, which have exhibited considerable volatility. Furthermore, domestic economic conditions, including inflation and growth rates, might also be influencing the bank's approach.
While the official data indicates a pause in China's gold accumulation, some analysts speculate that the country may still be discreetly purchasing gold due to the current high prices. Christopher Vecchio, Head of Futures & Forex at Tastylive, highlighted regional data suggesting China's gold purchases in late June during an interview with Kitco News. Vecchio also noted that although central bank demand continues to support gold, it no longer has the same market-driving impact as earlier in the year, as attention has now shifted towards the monetary policy of the Federal Reserve.
What are your thoughts on China's decision to temporarily halt its gold accumulation? Let us know in the comments section below.