Bloomberg reported that according to Chinese customs data released on May 20, the country's total gold imports in April reached 127.5 tons, the highest level in 11 months and skyrocketed by 73% compared to March.
It is noteworthy that this gold import increase comes at the time when world gold prices hit a historic peak, sometimes reaching 3,500 USD/ounce - an all-time record high.
According to analysts, the gold import boom could be the result of the People's Bank of China (PBoC) extending import quotas to a number of commercial banks in April.
With strict control over physical gold flows, the PBoC often only grants import licenses to a select number of financial institutions. The move to expand quotas shows that China is responding flexibly to the gold fever from individual and institutional investors.
China's gold buying wave also reflects the trend of finding a safe haven for assets in the context of escalating geopolitical tensions, especially in trade relations with the US and global financial fluctuations.
Investors see gold as a safe fortress to hedge against risks from the US dollar and the Western financial system. This is also the reason why gold demand increased sharply in the first quarter of 2024.
Experts say that China's large imports of gold while prices are rising could create a "gold loop" - where domestic demand pushes world prices up, and high prices further stimulate the psychology of hoarding.
Although world gold prices have adjusted slightly in May in the hope of easing trade tensions, the continued purchase by central banks - including China - to reduce dependence on USD-denominated assets is considered a long-term support factor for gold prices.
