The People’s Bank of China (PBOC) made full use of the dip in gold prices by accumulating 15 tonnes of the precious metal into its reserves in June. The XAU/USD index had fallen below the $4,000 range last month, and China’s central bank initiated the purchase to diversify its reserves.
China has been among the top net buyers of gold since 2022, after Poland. Even the central banks of Brazil and Russia, and India have been on an accumulation spree since February 2022. This came after the US imposed sanctions on Russia for invading and waging war against its neighboring country Ukraine.
The purchase of 15 tonnes of gold by the PBOC is China’s second-biggest accumulation spree this year. “This lifts its YTD net purchases to 41 tonnes, making it the second largest buyer based on available data,” said Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council.
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China’s Investment in Gold Has Delivered More than 100% in Profits
The timing of China’s gold accumulation remains significant as the entry position was made when selling momentum was high. This eventually pushed the XAU/USD index below the $4,000 level per ounce. Though the glittery metal is still struggling to climb over $4,100, China is still $100 in profit per ounce. PBOC’s gold investments have nearly doubled in value since 2022, as prices soared in the last four years.
Jerry Prior, the Chief Operating Officer at KraneShares told Kitco News that China’s gold accumulation mirrors its de-dollarization agenda. “There’s a long-term de-dollarization theme that is structural, and I think it’ll be persistent,” he said. “If countries are producing more oil and income starts flowing again, we don’t see that capital going into the Treasury market. We see it going back into the gold market,” he said, indicating that central banks are only eyeing gold.