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Why China is investing massively in gold ?

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This is an observation that many investors have been able to make in recent months: the price of gold is breaking records globally. Despite a slight decline noted in recent days, the precious metal is currently trading at nearly 2,150 euros per ounce, which is very high.

China is betting more than ever on gold

This craze is explained in particular by China as in a fascinating article. Thus, individuals tend to bet on this asset, because they no longer trust traditional investments such as real estate or purchasing stocks. The latter two having experienced successive crises within the Middle Kingdom.

Quoted by our colleagues, Ross Norman, managing director of MetalsDaily.com, an information platform on precious metals based in London, underlines in this regard: &#8220 ;China is undoubtedly driving up the price of gold. The flow of gold to China has gone from a steady stream to an absolute torrent”.

This is illustrated in the figures reported by the prestigious daily. Indeed, gold consumption in the country increased by 6% during the first quarter compared to the first three months of 2023, according to the China Gold Association. The increase was 9% last year.

In addition to individuals, the Chinese central bank plays a role in this craze. The financial institution thus increased its gold reserves for the 17th consecutive month. In 2023, it bought more gold than it had in the last fifty years.

Why ? The idea is to reduce its dependence on the US dollar. Moreover, Beijing is gradually reducing its holdings of Uncle Sam's Treasury bills. In March 2024, it had $775 billion in American debt, compared to $1,100 billion in 2021.

What can we expect next ?

These different factors combined end up weighing heavily on the market gold and therefore have a global impact. So much so that experts have a hard time predicting what tomorrow will bring and whether the price will rise or fall again.

In normal times, gold is a safe haven which tends to decline when the economic and geopolitical crisis subsides. While inflation is decreasing, the craze for gold is not weakening, which shakes up many certainties on the subject.

What to remember&amp ;nbsp;:

  • China is one of the major players in gold investment
  • This is playing out at the level of individuals and the central bank
  • This development is reshuffling the cards at the global level

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Teilor Stone

By Teilor Stone

Teilor Stone has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining Thesaxon , Teilor Stone worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my teilor@nizhtimes.com 1-800-268-7116