However, it seems that gold has become so expensive that the People's Bank of China has taken a break.
Official data showed on Friday that China's gold holdings were unchanged in May from the previous month – meaning the central bank was not buying gold.
The People's Bank of China's halt has left gold “vulnerable to further downside pressure,” Ewa Manthey, a commodity strategist at ING Bank, wrote on Monday.
The benchmark spot gold price is around $2,300 per ounce, about 6% below its record high of $2,450 per ounce on May 20.
Gold prices, a traditional safe-haven asset, have seen a decline this year, rising about 11% year-to-date due to global geopolitical tensions. In China, people are also turning to gold as a store of value amid economic uncertainty and a weak Chinese yuan.
But “gold's record high may be holding back demand for now,” Manthey wrote.
China's central bank's gold purchases actually started to slow in April, when it bought just 60,000 troy ounces of the precious metal. This represents a decrease from 160,000 ounces in March and 390,000 ounces in February.
Before it stopped buying last month, the People's Bank of China had been snapping up gold for 18 straight months, making it the world's largest institutional buyer. According to the industry association World Gold Council, the Chinese central bank bought 225 tons of gold in 2023. In second place was the Polish central bank, which bought 130 tons of the yellow metal.
David Tait, the council's chief executive, told Reuters on Monday that China is “just waiting and watching. If prices correct to $2,200 an ounce, prices will resume again.”
