• 2024-06-09

Gold: A bombshell from China

Precious metals suffered a heavy blow on Friday. The price of gold fell by more than two percent, while its little brother silver lost more than four percent. The reason for the weakness was the latest labor market data. There was also important news from China. Chinas central bank did not buy any gold last month, ending the Peoples Bank of Chinas (PBOC) massive buying spree that lasted 18 months and helped drive the price of gold to a record high in May. As soon as this fact became known in the morning, the precious metal fell by 1.5 percent within a few hours. The sell-off accelerated following the US labor market data, which caused gold to reach its lowest level in around a month. "My first thought is that China, a key driver of the gold rally last year, is far from finished buying gold," said Ole Hansen, head of commodity strategy at Saxo Bank. However, the pause shows that the central bank is wary of paying record prices. Gold and Bitcoin: Both part of the same phenomenon Gold expert Bußler: A warning! Gold: Canada makes the start Chinese purchases have already been declining in recent months. In April, the PBOC bought only 60,000 ounces, in March it was 160,000 ounces, and in February it was even 390,000 ounces. From a bullish perspective, it is now important that buyers other than the PBOC emerge. Otherwise, the recent weakness could be just the beginning of a larger downward move.