Amid geopolitical and economic uncertainties, gold has emerged as a favored investment, witnessing a significant price surge triggered by Russia's invasion of Ukraine and the conflict between Israel and Palestine. However, the prolonged and resilient rise of gold, surpassing $2,400 per ounce, owes much to China's influence.


Gold has continued its ascent despite factors that traditionally dampen its appeal, such as higher interest rates and a robust US dollar. (Bloomberg)

gold has continued its ascent despite factors that traditionally dampen its appeal, such as higher interest rates and a robust US dollar. (Bloomberg)

With waning confidence in conventional investments like real estate and stocks, Chinese consumers have turned to gold, bolstering its demand. Concurrently, China's central bank has been steadily increasing its gold reserves while reducing its holdings of US debt, a New York Times report revealed.

Adding to this, Chinese speculators are anticipating further appreciation in gold's value. China's already substantial impact on gold markets has become even more pronounced during this recent bullish trend, marked by a nearly 50 per cent surge in global prices since late 2022.

Remarkably, gold has continued its growth despite factors that traditionally dampen its appeal, such as higher interest rates and the US dollar.

As per Reuters, this week, physical gold demand in India stayed muted despite a minor price correction, with buyers anticipating a further decline. Meanwhile, Chinese premiums experienced a second consecutive week of decline due to sluggish demand during the holiday period.

In India, the world's second-largest gold consumer and a significant importer, domestic prices dropped to approximately 70,500 rupees per 10 grams this week, following a record high of 73,958 rupees last month.

Last month, gold prices surged despite the Federal Reserve's indication of maintaining higher interest rates for an extended period. Furthermore, gold has sustained its appreciation despite the strengthening of the dollar against nearly all major currencies worldwide this year.

Although prices have retraced to approximately $2,300 per ounce, there is a prevailing sentiment that the gold market's dynamics are now dictated less by economic fundamentals and more by the preferences and actions of Chinese buyers and investors.

Gold consumption in China saw a 6 per cent rise in the first quarter compared to the previous year, as reported by the China Gold Association. This uptick follows a 9 per cent increase observed last year.

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