The price of gold per ounce (28.35 grams) rose to a record 2 thousand 400 dollars (Tk 263 thousand 625 in Bangladeshi currency) in the world market this year. The market is still bullish, albeit slightly lower than it is now, and there is both the possibility and the fear of breaking the previous record again at any time.
According to international gold market analysts, this dramatic rise in gold prices is not entirely normal; Because at its core lies China’s unbridled interest in buying and hoarding the precious metal. Incidentally, China is the largest gold producing country in the world.
Interest in buying and saving gold is increasing in China due to geopolitical tensions, the war in the Middle East-Ukraine and the fluctuation of the dollar, according to a report by US media Bloomberg. From the country’s central bank, big traders and investors to retailers, ordinary people who can – are buying and hoarding gold. The main reason for their interest is the possible economic uncertainty in the future.
China and India have been the largest buyers of gold simultaneously in the international market so far; But last year China surpassed India in terms of demand. As a percentage in 2023, while the propensity to buy gold jewelery among Chinese buyers has increased by 10 percent, the propensity to buy gold ornaments among Indian buyers has decreased by 6 percent.
In addition to the trend of buying gold ornaments, the rate of investment using gold as a medium has also increased in China. According to Bloomberg, the rate of investment through gold in China will increase by 28 percent in 2023.
Philip Klapwicz, managing director of a Hong Kong-based market analysis firm, predicted that the trend of business investment through gold instead of money in China will increase in the coming years.
A jump in imports
Despite being the world’s largest producer of gold domestically, China has also greatly increased its gold imports to keep pace with demand. Over the past two years, China has imported more than 2,800 tons of gold, which is about a third of the gold reserves in the Federal Reserve System.
In addition, the amount of gold imported by Beijing from January to March this year is 34 percent higher than that from January to March last year.
China’s central bank, the People’s Bank of China, has been buying gold for 17 consecutive months. The People’s Bank of China is buying gold from the international market as well as from the central banks of other countries. This trend is expected to continue in 2024.
According to market analysts, a common trend among Chinese buyers is to stop buying gold when the price rises and start buying again when the price falls.
The Chinese government, however, recently issued a statement warning private investors and general buyers. The message said that if consumers do not rein in their demand, it will have a detrimental effect on the national economy in the near future.
Source: Bloomberg
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