The price of gold in China is now the highest in the world: why does everyone want a lingot?
Everyone is chasing gold in China, with the price skyrocketing to record levels and higher than in other world markets.
There is a clear trend reversal underway compared to the beginning of the year when the slowdown of the dragon had curbed interest in the metal, while consumers responded to uncertain economic conditions by conserving liquidity.
Today, however, the lingot market in China is busier than ever, commanding at times a record premium over international prices of over $100 per ounce, compared with an average of the last ten years less than $6.
What is happening and what is behind this gold rush? There is only one answer and it confirms the economic crisis in China, with citizens seeking safe investments.
Gold, price at highs in China. What happened?
On Wednesday, September 27 an ounce of gold in Shanghai was worth $2,007, about 6% more than the price in London or New York, according to Bloomberg calculations.
It is an escape for the safety of families, consumers, and students in economic difficulty.
The so-called Shanghai premium began rising in June, partly in response to import curbs imposed by the People’s Bank of China, which wanted to support the value of the yuan by reducing the need for dollars to buy gold. But now, the currency collapse is having the opposite effect, as investors chase dollar-denominated assets to preserve their value.
“With the yuan falling, the real estate market in crisis and capital controls preventing money from leaving the country, investors are buying gold”, they wrote in a report Bloomberg economists David Qu and Chang Shu.
In practice, if you take into account China’s prolonged real estate crisis, loose monetary policy, and collapsing bond yields, it is no mystery why the demand for a safe haven asset like gold is soaring.
Even as import restrictions have been eased, bullion is expected to remain supported by solid demand, Standard Chartered Plc analyst Suki Cooper said in a note last week.
Withdrawals from the Shanghai Gold Exchange in August increased 40% from the previous month, while imports increased 15%. Meanwhile, inflows into Chinese ETFs have risen to the highest since July 2022. Gold is also finding support from China’s central bank, which has increased purchases for 10 consecutive months as it diversifies its reserves.
Original article published on Money.it Italy 2023-09-27 12:13:39. Original title: Perché il prezzo dell’oro è da record in Cina
