Gold: China takes advantage of global distraction and seeks to become custodian of world reserves

The gold rally has accelerated since August and has generated a return of more than 12% during the last month supported by a growing positioning of futures and in entrances of the ETF funds, as well as in a seasonal rebound in the demand of the central banks. However, the operators of the world market of raw materials, and in particular, of metals, while validating new record prices for precious metal, simultaneously, evaluated China’s new plan to become a custodian of foreigners’ sovereign gold reserves. This is stated by Bloomberg that understands it as an attempt to strengthen the Chinese position in the world bull market.

According to Jack Ryan and Sybilla Gross, The Popular Bank of China (BPOC) is using the Shanghai Gold Stock Exchange (SGE) to persuade the central banks of allied countries to buy ingots and store them inside its bordersaccording to familiar sources with the subject. As they explain from Bloomberg, China is the world’s largest producer and consumer in precious metal, and its greatest participation in the world canoe market could imply a flexibility of import restrictions or a greater participation of gold in the financial services sector. China annually produces about 380 tons, closely followed by Russia and well behind Australia and the United States.

In this way, Beijing, at least, takes advantage of a certain global distraction to so many open geopolitical fronts and in conflict to advance their world initiatives and projects. According to Bloomberg, this initiative has been carried out in recent months and has aroused the interest of at least one country in Southeast Asia. Definitely, The measure would improve the role of Beijing in the global financial system, promoting its objective of establishing a world less dependent on the dollar and western centers such as the US, the United Kingdom and Switzerland.

What does China do to open its gold market

It is worth noting that countries have been acquiring gold as coverage against the growing geopolitical risks, creating the opportunity for the Popular Bank of China to offer a shelter for an asset considered crucial as a shock absorber to economic shocks.

While China’s action marks another step towards the construction of its role in the World Langotos trade, it is still far from challenging established centers such as the United Kingdom.

Analysts consider that if Beijing further boost local trade would help you accelerate your campaign to reduce the dollar dependence and internationalize Yuan.

In this regard, they remember that China has already adopted several measures to open its gold market such as the inauguration of the first offshore vault of the SGE and contracts in Hong Kong, an initiative designed to increase the volume of transactions in yuan. For its part, the BPOC has also recently flexible the restrictions on gold imports. What they explain regarding these novelties, is that, for potential clients, Chinese vaults could be an attractive option to create reservations and help avoid the risk of being isolated from world financial markets.

It should not be avoided that the purchase of gold by the central banks accelerated after Washington and its allies freezed Russia’s foreign exchange reserves in 2022 after the invasion of Ukraine. According to a director of ABC Refinery, Nicholas Frapp, China is trying to become a larger and more influential part of financial infrastructure, and if countries decide to store their gold in China, they will renounce the ease and liquidity of London.

Gold: tail wind and speculative positioning

Of course, not everything is pink for the precious metal, since the Goldman Sachs portfolio strategy team warns that, although the recent moderate monetary policy combined with a weaker dollar is winds of tail for gold, the recent rebound indicates a certain excess in relation to its “beta” implicit in the macroeconomic prices of the assets (captured by various factors such as “global growth”, “monetary policy”, “monetary policy” and the DXY index), in reference to its level of risk or volatility. While the Goldman raw material team continues to see upward risks for its prognosis of US $ 4,000 the ounce by mid -2026, speculative positioning has increased considerably.

It is not just the central banks and speculators who see the attractiveness of precious metals, since Bulliontar, leader in the distribution of bullion in Southeast Asia, informs having experienced an unprecedented demand in their Singapore office even when precious metals reached record prices. According to the operators of Bullionstar, they are seeing three clear patterns emerge. On the one hand, People with a high net worth and “family officers” are making substantial assignments in physical gold; On the other hand, usual investors are turning their savings into precious metals; And also the first -time buyers who enter the market of precious metals, and who were observing from outside, now realize that waiting is more risky than acting.

They commented on their social networks, highlighting that their “Bullion Center” in Singapore was experiencing an unprecedented demand even when precious metals reach record prices. “Pedestrian traffic in our center has been incessant, with tails throughout the day. People are buying aggressively instead of selling, when conventional logic says they should be collecting profits,” they warned. “Despite its different origins and entry points, all those who enter through our doors have reached the same conclusion: It makes no sense to keep dollars depreciated. They are rational actors that respond to monetary reality. Physical gold and silver offer the only true exit to a system designed to erode purchasing power ”they argued.

While it is true that they are gold retailers, the anecdote confirms a broad trend in the industry. Langotos market experts suspect that any short -term sales fear by speculators (highlighted by Goldman) will be absorbed by the new hoarding of China and the acceleration of retail demand.

Regarding the theme of gold storage in China, days ago Bloomberg also recorded that the gold bilges in stores linked to the Shanghai futures bag had reached a historical maximum, another sign of a resilient demand for investments in gold in China. “There have been more than 36 tons of gold bullion for delivery against futures contracts, an amount that has almost doubled in the last month. The accumulation of reserves reflects an increase in arbitration activity, driven by the strong demand for futures, which are negotiated with a considerable premium with respect to physical metal. ”