China’s central bank pauses gold purchases for second month

China's central bank did not buy any gold in the month of June, thereby marking the second straight month of no addition to reserves. This was a pause while gold prices eased from their record highs.

According to official data published Sunday, the People's Bank of China held 72.8 million troy ounces of gold at the end of June, while in May, it ended an 18-month buying spree during which gold prices surged to unprecedented levels.

However, despite this pause, some analysts believe that the PBOC could resume buying due to China's desire to diversify its reserves and hedge against the depreciation of currencies. In a report, the World Gold Council indicated that about 20 central banks intend to increase their gold holdings in the coming year due to geopolitical and financial risks.

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The high gold price could have kept many people at bay, having hit an all-time high above $2,400 an ounce in May. Since then, prices have partially fallen as investors pulled back on expectations of a US interest rate cut this year. The announcement by the PBOC of a buying pause in May was followed by the biggest intraday fall of gold in nearly three years.

Meanwhile, central banks across the world are on a record gold-buying spree. The total central bank consumption was 1,037 tonnes in 2023, the second-highest annual purchase in history after 1,082 tonnes in 2022. While China is holding its gold purchase programme for later, India boosted its gold reserves by most in two years in June, according to the World Gold Council.