"Gold Digger: China back making big gold buys as price tops US$3300/oz"
Summary
China’s return to significant gold buying, alongside global economic and geopolitical concerns, has driven gold prices higher and boosted the performance of gold-related equities, especially in Australia
Gold Price Surge and Market Performance
- Gold prices have rebounded above US$3300/oz, reaching US$3320/oz, after a period of volatility.
- The ASX All Ords gold sub-index rose 13% in a week, marking a 62% gain over the past 12 months
Chinese Gold Demand
- Chinese gold imports hit an 11-month high in April, reaching 127.5 metric tonnes, even as prices were at or near all-time highs.
- The People’s Bank of China reportedly allocated fresh import quotas to commercial banks to meet strong demand from both institutional and retail investors
- Open interest on the Shanghai Futures Exchange (SHFE) for gold is at its highest since Q4 2019, indicating robust trading activity
Drivers Behind Gold’s Safe Haven Appeal
- Key factors boosting gold demand include:
- Heightened geopolitical tensions in the Middle East.
- The ongoing war in Ukraine.
- Moody’s downgrade of America’s credit rating[1].
- These global uncertainties have increased gold’s appeal as a safe-haven asset.
Market Dynamics
- Buying activity in China, especially during the night session on the SHFE, has triggered follow-on rallies in international markets like the New York COMEX.
- The arbitrage spread between SHFE and COMEX widened significantly, reflecting strong Chinese demand[1].
ASX-Listed Precious Metals Stocks
- Many ASX-listed gold and precious metals companies posted strong weekly gains, with some stocks up over 20–40% in a week.
- Notable performers include Minrex Resources (+29%), Newpeak Metals (+44%), and Aston Minerals (+28%) among others
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