Gold purchases for its reserves were resumed by China’s central bank after a six-month hiatus.
China’s apprehension regarding the crypto industry has once more surfaced. The People’s Bank of China (PBOC) has today disclosed official data that the central bank resumed gold purchases for its reserves in November. This action was suspended for six months following the precious metal’s record-high prices.
Bitcoin is not a competitor to the dollar, as per Fed Chief Jamie Powell and other analysts; rather, it is a direct competitor to gold. Bitcoin shares numerous similarities with gold, such as its scarcity, enduring nature, and difficulty in mining.
In the past few months, the BRICS nations have stepped up their efforts to introduce their own currency as part of a general de-dollarization initiative. Decentralized finance, which is conducive to Bitcoin, has been considered.
Nevertheless, China has been uncertain about the legalization of crypto entities. Most recently, the nation has chosen to implement incremental measures, such as the regulation of virtual tokens by the stablecoin bill in Hong Kong. In 2023, the PBOC was the world’s largest official sector consumer of gold, and China has chosen gold as its reserve asset.
China’s gold reserves increased by 160,000 fine troy ounces to 72.96 million fine troy ounces at the conclusion of November, according to reports. Months prior, this represented an increase from 72.80 million troy ounces.
In April of this year, the PBOC increased its stockpiles, which bolstered bullion prices’ resilience. Nevertheless, the value of China’s gold reserves decreased from $199.06 billion in October to $193.43 billion in November.
Donald Trump’s victory ignited a post-election sell-off that resulted in gold’s first monthly price decline since June.
In addition, spot prices for the precious metal have decreased by 5% since attaining a record high of $2,790.15 per ounce on October 31, but they have still increased by 28% thus far this year.
Gold experienced an all-time high in October as a result of the recent US presidential election and the escalating tensions in the Middle East and Ukraine, which led to an increase in the demand for safe havens.
Furthermore, China’s consumers have diminished their demand for bullion as prices have risen by nearly 30% already this year.
Ole Hansen, the director of commodity strategy at Saxo Bank, stated, “The resumption will demonstrate that the PBOC has become acclimated to the record-high price levels and is prepared to accumulate reserves despite this.”
Additionally, the PBOC’s resumption of purchases may increase the demand for Chinese investors, which has been depressed since the bank suspended its 18-month purchasing campaign in May.
The current price of gold (XAU/USD) is $2,640.30, which is a 0.32% increase. Nevertheless, it remains below the critical pivot at $2,644.90. Gold attempted to breach a bearish flag pattern once more on Friday, but it was unsuccessful.
The main resistance targets are $2,657.02 and $2,666.24, while $2,634.00 and $2,623.66 provide support. The 200-day EMA at $2,646.99 suggests resistance, while the 50-day EMA at $2,642.35 offers near-term stability.
A sustained decline below $2,644.90 could shift sentiment to bearish, with a focus on lower support levels, while a break above this level could affirm the bullish momentum.
Also Read: A Bitcoin Strategy Proposed by Michael Saylor says, “Buy, Hold, Never Sell”
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