StoneX Analyst Rhona O'Connell Shares Perspective on China's Gold Buying

Key Points

China, the leading official sector buyer of gold in 2023, is likely waiting for prices to dip to around $2,200 per ounce before resuming purchases
Central banks are expected to continue increasing gold exposure over the next 12-24 months, with China seen as the main buyer
Gold is treated as a hedge against geopolitical and economic risks, and a preferred investment in China amid economic concerns and a weaker yuan

China's recent pause in gold buying after 18 consecutive months of purchases has sent shockwaves through the global gold market, causing prices to drop sharply. However, StoneX analyst Rhona O'Connell believes this is just a temporary lull.

"The fact that China's gold buying was minimal in April, and in May it was reported as zero, does not imply by any stretch of the imagination that they are not going to start reporting again," O'Connell stated.

The People's Bank of China controls gold inflows via quotas to commercial banks. In April, the Shanghai Gold Exchange raised margin requirements on some gold futures contracts as prices climbed to record highs.

The current pause has caused a significant drop in global spot prices, but sentiment remains bullish due to ongoing geopolitical tensions and upcoming elections.

As the global gold market reacts to China's moves, O'Connell and the StoneX team continue to provide expert analysis and insights to help clients navigate these dynamic conditions.

Dive Deeper: Visit the Precious Metals page on StoneX.com for more insights from Rhona O'Connell and our team of experts.

Precious Metals

Original article link.

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