Gold : When gold prices are at a high all over the world, China is continuously buying gold in large quantities. China has continued purchasing gold for the last 22 months. During this period he has purchased about 20 tonnes of gold. At a time when prices are very high, this purchase by China has become a topic of discussion at the international level. This decision is not limited to any one month. According to economic experts, China’s central bank is increasing gold reserves as part of its strategy keeping the coming years in mind. In view of the changes taking place in the global economy, China is trying to strengthen its foreign reserves. Last month, China bought about 6.5 lakh ounces of gold, which is said to be its biggest purchase after October 2023. After this, China’s official gold reserves increased to about 76.7 million ounces. Normally buyers pull back when prices rise, but China has continued its purchases.
Gold: Distance from dollar and increasing confidence in gold
The decreasing share of the US dollar is also being considered an important reason behind this strategy of China. Earlier the share of dollar in the world’s foreign exchange reserves was about 72 percent, which has now come down to about 55 percent. With the gradual change in the status of the dollar, many countries are looking at other options for their reserves. Gold has overtaken US government bonds as the leading safe asset by market value. Central banks are now considering gold as an important option for security instead of relying only on dollar-based assets. The survey of the World Gold Council has also revealed the increasing confidence of central banks towards gold. About 90 percent of central banks believe that gold can act as a security shield in times of economic crisis. At the same time, about 45 percent of central banks have expressed their desire to increase their gold reserves in the next one year.
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China is not alone, many countries are increasing gold
Gold buying is not limited to China only. Many major countries and central banks are moving towards increasing the share of gold in their foreign reserves. According to experts, its purpose is not just economic fear but a long-term strategy. In case of any kind of economic restrictions, financial instability or crisis in the international market, gold can give additional security to the countries. The US dollar still plays an important role in global trade, but gold’s importance in terms of foreign exchange reserves is continuously increasing. China’s buying of gold for 22 consecutive months shows the seriousness of this strategy. Beijing appears to be preparing in advance for possible future economic crises and changes to the dollar-based system. Efforts by other countries to increase gold reserves also indicate that the perception of safe assets in the global economy is changing rapidly.