China Adds Gold For 5th Month, Demand Surges During Important Indian Holiday
China’s central bank added gold to its reserves for the fifth month in a row in April, the latest emerging market central bank to stock up on the yellow metal.
As The FT reports, The People’s Bank of China said its gold reserves rose to 61.1m ounces last month, an increase of 480,000 ounces from March, and bringing its total gold holdings to about $78.3bn.
Since it started buying gold in December after a 25-month pause, China has built up its gold holdings by almost 60 tonnes, according to analysts at Commerzbank.
Emerging market central banks have become some of the largest buyers in the gold market as they look to diversify their reserves away from the dollar.
Last year central banks, led by Russia, bought more gold last year than at any time since America decided to move off the gold standard in 1971, with around $27bn worth of purchases.
The desire to buy the precious metal was driven by “economic uncertainty caused by trade tensions, sluggish growth and a low/negative interest rate environment” among other reasons, the WSG noted.
And it’s not just China, Russia, and Central Banks, SchiffGold.com reports that demand is up sharply among Indian citizens…
Jewelers and dealers in India reported brisk gold sales on Akshaya Tritiya, despite the holiday falling on a workday and extreme heat in some regions of the country.
Akshay Tritiya ranks as one of the four most important days for Hindus. The word Akshay roughly translates to “the never diminishing.” The day is believed to bring good luck and success. It is also considered one of the most auspicious occasions to buy precious metals, including gold.
According to the Economic Times of India, gold sales were up by as much as 25% on Akshay Tritiya, which fell on May 7 this year.
Saurabh Gadgil serves national vice-president of the India Bullion & Jewellers Association. He told the Economic Times he was very positive about Akshay Tritiya sales this year.
Footfalls are good as there is a positive sentiment. Despite being a working day and the sweltering heat, there has been steady stream of people coming in to pick up pre-booked jewelry and also some token items from the morning. But the momentum gathered more steam after office hours and we expect more pick in the volume through the rest of the night.”
Dealers in both northern and southern regions of India reported surging demand.
Kalyan Jewellers chairman TS Kalyanaraman said that wedding sales have been strong this year in general due to stable prices and positive sentiments.
Bullion dealers also reported strong Akshay Tritiya sales. Khanna Gems’ Pankaj Khanna said sales volume rose 20% in offline bullion demand and the company reported over 1,200 transactions for silver and gold coins online.
Indians traditionally buy and hold gold. The yellow metal is interwoven into the country’s marriage ceremonies and cultural rites. Indians also value gold as a store of wealth, especially in poor rural regions. While Americans generally think of gold as a luxury item, many Indians view it as a necessity. In the Asian nation, buying gold is not just for the rich. In fact, a recent survey shows that possessing the yellow metal is a universal phenomenon across all income classes in India.
India ranks second in the world in gold demand behind China.
While owning precious metals is part of India’s culture, the fundamental reasons Indians buy gold and silver are no different than those that motivate people over the world to invest in precious metals – they historically preserve wealth, they provide a safe haven, and most significantly, they are real money.
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