July 19, 2024
Some analysts think China’s central bank’s growing purchases of gold is a geopolitical reaction. After Russia invaded Ukraine, the U.S. and its allies froze billions of dollars of Russian assets, and analysts have said they believe China views gold as a way to gain protection against the U.S. and any other country that could freeze its assets.

Canada’s gold exports to China rise, shining through the trade tensions

Precious metals now represent Ontario’s largest export to the country

China’s demand for gold has risen in the past few years, helping to usher in record-breaking prices and a growing trade relationship with Canada for the shiny metal.

In the past, interest rates in the United States and flows into or out of gold-backed exchange-traded funds (ETFs) were used by many analysts as a quick way to predict the direction of the gold price. In recent years, though, U.S. interest rates rose and gold-backed ETF holdings contracted, which should have softened gold prices, but the price of bullion reached all-time highs, currently at US$2,371 per ounce.

“Gold’s bellwether relationship with U.S. real interest rates has broken down quite spectacularly over the past two years, with gold reaching all-time highs despite high real rates,” Max Layton, global head of commodities research at Citigroup Inc., said in a new note on gold prices.

He said gold demand from China and central banks accounted for 85 per cent of mine supply through the first three months of 2024 and 70 per cent on average during the prior two years. That’s up from 25 per cent during the three-year period from 2019 to 2021.



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