In March, China's gold buying spree dipped amidst soaring prices, hinting at further decline in April after prices surged to unprecedented levels on Monday.
China's foreign exchange group disclosed a modest addition of 160,000 ounces in March, bringing its total holdings to 72.74 million ounces, marking the 17th consecutive month of gold acquisition.
However, the increase of 4.5 tonnes in March sharply contrasted with the 12 tonnes purchased in February, resulting in a total holding of approximately 2,262 tonnes.
During the month, spot gold experienced a remarkable climb from $US2,040 per ounce on March 1 to a new all-time high surpassing $US2,265 by March 31.
March's purchases represented the lowest since China's central bank re-entered the gold market in November 2022.
Simultaneously, the Comex front month (June) witnessed a surge to an all-time intraday high of just over $US2,372 an ounce on Monday, boosted by a weakening US dollar. Gold closed at $US2,357 an ounce, marking a half-percent increase.
This increase propelled the Australian dollar past 66 US cents and elevated the Australian dollar gold price to $A3,540 an ounce.
China's gold reserves have grown by approximately 27 tonnes this year, decelerating after surging in 2022 and 2023 when the central bank's purchases exceeded 1,000 tonnes each year.
Concurrently, the State Administration of Foreign Exchange (SAFE) reported China's forex reserves at $US3.246 trillion by the end of March, reflecting a month-on-month increase of $US19.8 billion.
The decline in official Chinese gold purchases in March suggests a pragmatic approach to diversifying the country's foreign exchange reserves away from the US dollar, driven by prevailing prices. Had China strongly favored gold, it would have continued heavy buying in March; the reduction indicates a growing caution regarding current prices.
