Gold is getting so expensive that even China’s central bank stopped buying

The PBOC’s pause has left gold “vulnerable to more downside pressure,” wrote Ewa Manthey, a commodities strategist at ING Bank, on Monday.

The benchmark spot gold price is around $2,300 per ounce — about 6% lower than its record high of nearly $2,450 per ounce on May 20.

Prices of gold, a traditional safe-haven asset, have been on a tear this year, gaining about 11% this year-to-date due to global geopolitical tensions. In China, people are also loading up on gold as a store of value amid economic uncertainties and a weak Chinese yuan.

But “gold’s record-breaking rally might dent demand for now,” wrote Manthey.

China’s central bank gold buying had actually started to slow in April, when it bought just 60,000 troy ounces of the precious metal. That was down from 160,000 ounces in March and 390,000 ounces in February.

Before its pause in purchases last month, the PBOC had been snapping up gold for 18 straight months, making it the world’s largest institutional buyer. According to industry association World Gold Council, China’s central bank purchased 225 tons of gold in 2023. In second place was Poland’s central bank, which bought 130 tons of the yellow metal.

David Tait, the council’s CEO, told Reuters on Monday that China is “just waiting and watching. If prices correct to the $2,200 per ounce level, they will resume again.”