Global central banks continued accumulating their gold reserves in March, with China leading that race after adding to its bullion holdings for a fifth straight month. This trend, which picked up the pace earlier this year, lifted gold prices to the highest in more than a year.
China Bought an Additional 18 Tons of Gold in March; Total Holdings Now Sit at 2,068 Tons
Gold’s price rose to its highest annual level earlier this week as global central banks continued to increase their holdings of the safe-haven metal, particularly in China. On Wednesday, the price breached the critical $2,000 threshold after receiving a boost from weaker-than-anticipated US economic data.
According to World Gold Council (WGC), global central banks have accumulated bullion at the quickest pace in history in the first two months of 2023. More specifically, the banks purchased net 125 tons of gold in January and February, marking the highest amount on record for that period since they became net buyers 13 years ago.
China’s central bank has been particularly committed to stocking up on gold, increasing its bullion reserves for a fifth consecutive month in March. According to new data released on Friday, the People’s Bank of China added another 18 tons to its gold holdings last month, with the bank now holding a total of 2,068 tons of gold in its reserves.
Over the past four months before March, China bought roughly 102 tons of bullion and was the biggest buyer in February after adding nearly 25 tons. China was also among the nations that purchased the highest amount of gold in January, alongside Turkey and Kazakhstan, according to WGC data.
Major central banks worldwide have been flocking to the yellow metal amid geopolitical turmoil and record-high inflation. Central bank demand for gold grew for a second year in 2022 when inflation rose to the highest level in four decades.
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The Cooling Labor Market and Troubled Dollar Among Gold Price Drivers
Earlier this week, the Labor Department reported tepid US economic data, increasing the likelihood of slower rate hikes by the Federal Reserve despite growing concerns about oil-led inflation. The report showed that job openings declined to the lowest level in almost two years, suggesting that the labor market, one of the major drivers of US inflation, was cooling.
The economic data weighed on the US dollar and Treasury yields, helping gold to breach the $2,000 mark. Spot gold hit $2,017.92 per ounce on Wednesday, while US gold futures rose to $2,038.
The weakening US economic data indicates that Fed’s recent efforts to slow the labor market and other inflation sources may bear fruit. The US central bank has hiked benchmark interest rates nine times since March 2022.
Do you think the gold price will maintain its upward trajectory throughout 2023? Let us know in the comments below.
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