Gold Buying Increases in May
In the month of May, there was a big rise in gold buying by the Chinese central bank. Around 10 tons of gold were added in just one month. (see the image below)
This is important because for many months before this, the buying was slow. But as soon as gold prices fell after January, the buying activity increased again. This shows a clear pattern of smart buying when prices are lower.
China’s Growing Gold Reserves
China has been collecting gold for a long time now. By now, it has reached about 2,331 tons of gold in total. Gold now makes up around 9% of its total foreign reserves. This number is slowly growing. In the year 2023, the buying was even stronger, which shows a clear long-term plan to increase gold holdings.
Why Central Banks Prefer Gold
One important question comes here. Why are central banks around the world buying so much gold? These banks are the ones that create money. Still, they are choosing to store value in gold. This clearly shows that trust in paper money is slowly going down. Many countries are trying to protect themselves by holding more gold instead of relying only on currencies.
Less Trust in Paper Money
There is also a sign that trust in things like US treasury and paper assets is getting weaker. Many non-US central banks are increasing their gold reserves for safety. Gold is seen as a strong and stable asset. When there is doubt in the global system, gold becomes more important.
Future Plans for Gold Buying
A recent survey showed that around 45% of central banks are planning to increase their gold holdings by 2026. This is a strong signal. It means that many countries believe gold will play a bigger role in the future. This can also be seen as a long-term trend.
Opportunity in Gold Investment
Gold prices have corrected by around 20% from recent highs. This has created a good chance for accumulation. Central banks are clearly using this opportunity to buy more gold. The data shows that whenever prices fall, buying increases. This is a strong signal for investors to watch closely.
