The People’s Bank of China added no gold to its reserves in May, ending a buying spree that lasted for 18 straight months.
According to Trading Economics data, PBOC reserves stayed at 72.8 million troy ounces in May, with the reserve value increasing to $170.96 billion from $167.96 billion in April.
China, alongside India, has been one of the most prominent gold buyers in recent years as the central bank sought to diversify its foreign exchange reserves.
Gold is the de facto safe-haven asset for central banks around the world.
Uncertainty over US inflation and interest rates, alongside heightened geopolitical tensions, have prompted large-scale buying, sending the precious metal’s spot price to all-time highs in 2024.
It peaked above $2,400 an ounce for the first time ever in May but has since retreated to $2,332 at the time of writing.
Although macroeconomic and geopolitical concerns remain, China’s buying halt suggests the cycle may have peaked for now.
Caroline Bain, chief commodity economist at Capital Economics, suggested back in April that gold prices had peaked for the year.
She said at the time that the Chinese gold craze was “likely to unwind this year”, a prediction that has come to bear.
Bain added: “The 16.5% surge in the gold price since the start of the year appears increasingly out of kilter with the interest rate outlook.
“Indeed, the strong US employment report (in April) and (the) March CPI print, which arguably suggested rates could be higher for longer, coincided with rises in the gold price, while Treasury yields and the US dollar also rose.”