For more than a year, China’s central bank has been buying up large amounts of gold. The move, along with the wars in Ukraine and Gaza, have helped spike the price of the precious metal to new highs.
The price of gold broke the $2,300 (€2,212) level for the first time this week as geopolitical issues, expectations of US interest rate cuts and China’s accumulation of the precious metal spurred interest from speculators.
Gold is seen by investors as a safe haven in times of turmoil and a hedge against currency devaluation, so the conflicts in the Middle East and Ukraine have helped the recent price rise, along with the post-COVID inflation spike.
The move by China’s central bank, the People’s Bank of China (PBC), has been mirrored by other mostly emerging market central banks, who are all keen to up their gold holdings.
DW takes a look at why Beijing has gone on a gold-buying spree.
This is the best summary I could come up with:
Gold is seen by investors as a safe haven in times of turmoil and a hedge against currency devaluation, so the conflicts in the Middle East and Ukraine have helped the recent price rise, along with the post-COVID inflation spike.
As well as the PBC, Chinese consumers have been buying gold coins, bars and jewelry, after their real estate investments, the yuan currency and the country’s stock market dropped in value due to recent economic woes in the world’s second-largest economy.
BRICS nations, including China, are concerned about how Washington weaponizes the dollar to preserve its global economic and geopolitical position.
Following Russia’s invasion of Ukraine in February 2022, the US and European Union imposed several rounds of sanctions on Moscow, including freezing the Russian central bank’s foreign reserves.
Chinese leaders are worried that the country could face similar US curbs if it decided to further flex its military muscles or if the trade war with Washington worsened.
Chinese President Xi Jinping has said that his country could retake Taiwan, a democratically run island Bejing considers its own territory, by force if necessary.
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