Chinese central bank bought Gold again for the first time after a six-month break – Commerzbank
The Gold price rose to as high as $2,675 per troy ounce yesterday, Commerzbank’s commodity analyst Carsten Fritsch notes.
News from China provide a tailwind for Gold
“Furthermore, it was announced over the weekend that the Chinese central bank (PBoC) bought Gold again in November for the first time after a break of six months. According to a PBoC publication, its Gold holdings rose to 72.96 million ounces by the end of November, compared with 72.80 million ounces at the end of October. The increase in Gold reserves in November corresponds to purchases of 5 tons of Gold.”
“Compared with previous monthly purchase volumes of up to 30 tons, this is a small amount. More important, however, is the signal that the PBoC has started buying Gold again after having paused for six months. The purchases may have been in response to Donald Trump's election victory, which threatens China with the introduction of punitive tariffs of 60%.”
“In addition, the Gold price had fallen significantly in November after rising to a record level, which may also have stimulated buying interest. The lower Gold price also meant that the PBoC's Gold reserves were worth less in USD terms at the end of November than at the end of October, despite the purchases. It will now be important that Gold purchases continue in the coming months, i.e. that the purchases in November do not remain a flash in the pan.”
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FXStreet Insights Team
FXStreet
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