Gold’s bullish momentum is showing signs of weakness after approaching resistance at $2,400 an ounce on Friday.
Some analysts said traders were taking profits on Monday following news over the weekend that China's central bank did not add to its gold reserves for a second straight month.
Official data from the People's Bank of China showed that its gold reserves remained at 2,264 tons. Investors reacted calmly to the news as gold continued to hold above key support at $2,350. Last month, when the People's Bank of China ended its 18-month gold buying spree, gold prices fell more than 2% in overnight trading after the news was released.
However, some analysts pointed out that although China has not updated its gold reserves on paper, it does not mean that it has stopped buying gold. Some analysts suspect that China may have started buying gold secretly as gold prices remain abnormally high. In a recent interview, Christopher Vecchio, head of futures and foreign exchange at Tastylive.com, said that some regional data showed that China bought gold at the end of June.
However, Vecchio added that while central bank demand is supportive for gold, it no longer has the same driving force as it did at the beginning of the year, noting that the market is now focused on the Federal Reserve's monetary policy.
Meanwhile, the People's Bank of China is just one of a growing number of central banks buying gold. Last week, Juan Carlos Artigas, head of research at the World Gold Council, noted that the gold market is not just one central bank buying gold.
He added that while central bank demand might not reach the record levels of 2022 and 2023, purchases are expected to be above the annual average of 500 tonnes over the past decade.
“Our message is that central banks are ready and gold is set for another strong year,” Artigas said.
While China did not officially buy any gold last month, other central banks continued to add to their reserves.
In social media comments last Friday, Krishan Gopaul, senior market analyst at the World Gold Council, said data from the Polish central bank showed that the bank added 4 tons of gold reserves in June. This is the third consecutive month that the Polish central bank has purchased gold. He said: "(The Polish central bank's) total gold holdings are now 377 tons, nearly 19 tons higher than the end of 2023."
Meanwhile, Gopaul pointed out that data from the Reserve Bank of India showed that it bought 9 tons of gold in June. He said: "This is the highest monthly purchase by the (RBI) since July 2022. The total net purchases so far this year have exceeded 37 tons, raising total gold holdings to 841 tons."
Article forwarded from: Jinshi Data
