China’s central bank increased its gold reserves for the second consecutive month in December, signaling a renewed interest in the precious metal after a six-month pause due to soaring prices. Data released on Tuesday showed that the People’s Bank of China’s gold holdings rose to 73.29 million fine troy ounces in December, up from 72.96 million in November. The central bank resumed adding to its gold reserves in November following a half-year hiatus, demonstrating its ongoing commitment to diversifying its reserves even amid record-high gold prices.
The metal’s rally to an all-time high in 2024 was driven by factors such as monetary easing in the US, increased safe-haven demand, and continued purchases by global central banks. However, the rally cooled following Donald Trump’s US election victory, which strengthened the dollar.
China’s central bank boosts gold reserves
Goldman Sachs Group Inc. recently adjusted its forecast for when gold prices are expected to reach $3,000 an ounce, now anticipating fewer rate cuts from the Federal Reserve in 2025. The People’s Bank of China’s renewed purchases highlight its strategy to balance its reserve portfolio despite market fluctuations and varying economic conditions.
The move also underscores the central bank’s view of gold as a valuable asset for diversification and risk management. As global economic uncertainty persists and geopolitical tensions remain elevated, central banks around the world are likely to continue their gold purchases to hedge against potential risks and maintain the stability of their reserves. Investors and market analysts are closely monitoring these developments, as central bank actions often provide valuable insights into the broader economic landscape and the outlook for gold prices in the future.