The global gold markets received a shock that would reduce gold prices ๐ Have you found an alternative to gold that is more guaranteed, stronger and independent??? (Cryptocurrencies) for example ๐
In a surprising move, more news circulated about China stopping buying gold for its reserves for the first time in 18 months in May 2024. This sudden development sparked a wave of speculation and analysis about its effects on gold prices and its global market. In this article, we will take a closer look at the reasons. China's decision to make this sudden decision, its impact in the short and long term, and the possibility that this indicates the end of the era of China's dominance of the global gold market.
As it is known, China ๐จ๐ณ is the largest economy that maintains gold reserves in the world, estimated at more than 174 billion dollars, or about 72.8 million ounces, at the end of last May, which are the same levels recorded in April.
But despite the stability of the reserve size, the value of Chinaโs gold possessions rose to $170.96 billion by the end of May from $167.96 billion in April, thanks to the rise in prices.
what is the reason?
There is no official reason issued by the Chinese Central Bank to explain this sudden stop, however, analyzes point to several possible factors:
RMB appreciation: Buying gold with RMB becomes more expensive, while potential returns decrease.
Economic slowdown: Chinese authorities may also reassess spending priorities and direct money away from riskier assets such as gold.
Changing investment strategy: China may be reducing its reliance on gold and diversifying its reserves through other investments.
Geopolitical factors: Growing tensions between the United States and China may push China to reduce its reliance on US assets.
Technical considerations: A stop may be valid due to the sharp rise in gold prices.
Therefore, China stopping buying gold has two main effects:
Low gold prices: In the short term, this led to a decline in gold prices, with NYSE gold futures falling 1.4% to $2,341.37 an ounce.
After announcing the stop.
It is difficult to determine the long-term impact conclusively: it depends on multiple factors, such as global economic conditions, the geopolitical landscape, the policies of the US Federal Reserve, and the behaviors of other investors, but Chinaโs approach to the digital currency market seems clear, revealing many upcoming surprises.
The next is more beautiful, God willing, just be patient ๐๐ค๐ผ๐
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