China halts gold buying for 3rd straight month

China’s central bank has extended its pause on gold purchases for a third consecutive month, even as the precious metal reached a record high in July. The People’s Bank of China (PBC) maintained its gold holdings at 72.8 million troy ounces at the end of last month, according to official data released on Wednesday.

This marks the end of an 18-month buying spree that had bolstered gold prices. The decision to abstain from additional purchases suggests that soaring bullion costs are deterring central banks worldwide.

Singapore, for instance, reduced its gold reserves in June by the most since at least 2000. The World Gold Council (WGC) reported a 39 per cent slump in state-backed demand during the second quarter compared to the first three months of the year.

Despite the current hiatus, some analysts predict that central bank buying will remain a significant factor in the gold market. The PBC is expected to resume purchases as part of its strategy to diversify reserves and protect against currency fluctuations.

While gold prices climbed to unprecedented levels in July due to anticipated monetary easing by the Federal Reserve, the surge has dampened retail demand for gold jewelry in China.

However, there has been a notable increase in purchases of gold bars and coins as investors seek to safeguard their wealth amid economic uncertainties.

The WGC reported that strong physical bar buying, especially among Asian family offices, contributed to the best second quarter for gold demand in at least 25 years.

Attribution: Bloomberg