As the countdown to the Chinese New Year begins, Commodity traders have turned their attention to the world’s largest Gold consumer for clues on the precious metals next big move.
According to data tracked by GSC Commodity Intelligence – Chinese Investors, households and banks have been piling into Gold at one of the fastest paces seen since the Global Financial Crisis as the country's stock market and real-estate sector continues to sink deeper into economic meltdown.
While it is a customary tradition to buy Gold during the Lunar New Year holiday season, reports of robust demand this year are grabbing headlines because China’s bullion-buying spree, this time around happens to coincide with a stock market crash.
China's stock market hasn’t just had a bad start to 2024. It’s having one of its worst starts to the year ever. China's market mayhem has dragged the country's benchmark CSI 300 equity index down more 30% YTD – wiping out a staggering $6 trillion in market value from its peak reached in 2021.
But that's just one symptom of a much bigger problem. The lack of alternatives and the fact that it’s become a lot more difficult than it was a few years ago to get your money out of China and invest elsewhere – has supercharged Gold’s appeal as the ‘go-to’ safe haven and store of value in times of uncertainty.
Together with blistering demand from central banks, China’s bullion binge helped push the price of Gold to all-time record highs in December and has kept prices firmly above $2,000 an ounce this year – ultimately setting a new floor for the market.
In a recent note to clients, analysts at GSC Commodity Intelligence said mounting evidence shows that we are now in a “new era” for Gold.
China’s bullion buying spree simply represents, yet another bullish tailwind for precious metal prices – alongside all the other macro and geopolitical events currently unfolding from escalating tensions in the Middle East to the expectation that interest rates will soon begin to fall.
With Gold priced in multiple currencies including British Pounds, Euros, Australian Dollars, Chinese Yuan and Japanese Yen currently trading at all-time record highs – the big question now is will Gold priced in US dollars be next to hit fresh all-time highs?
Analysts at GSC Commodity Intelligence believe it's not a question of 'if' but 'when'. In fact, you just have to take a look at what happened in 2023.
Last year, Gold priced in multiple currencies set new all-time highs by an average of 100 days prior to Gold price denominated in US dollars. If this is a leading barometer for predicting the performance of Gold prices as a whole, then this ultimately means one thing.
Higher Gold prices are coming!
That’s welcoming news for the bulls, but painful for anyone sitting on the sidelines, who must now decide how much FOMO they can handle.
Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:
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