Gold Rises After PBOC Resumes Buying Amid Geopolitical Tensions
Gold rose after China’s central bank added bullion to its reserves for the first time in seven months, as the rapid collapse of the Syrian government further rattled the Middle East.
Bullion rose as much as 0.7% to trade near $2,650 an ounce, after the People’s Bank of China said on Saturday it bought 160,000 troy ounces of bullion last month. The addition was the first since April, ending an 18-month buying binge that had helped prop up prices.
The resumption of purchases suggests the PBOC is still looking to diversify its reserves and guard against currency depreciation, even with bullion near its highest level on record. However, the volume it bought — about five tons — was relatively small compared with monthly additions earlier this year.
Traders are monitoring developments in Syria, after President Bashar al-Assad fled as rebel forces seized the capital, Damascus. U.S. airstrikes hit dozens of Islamic State targets in the country’s center on Sunday as President Joe Biden warned that Assad’s fall could lead to a resurgence of Islamic extremism.
“The collapse of the government in Syria could lead to an influx of shelter demand,” ANZ Group Holdings Ltd. said. “The latest November nonfarm payrolls confirm that rebalancing is continuing in the U.S., which should continue to support the Fed’s easing bias,” it said in a note.
Markets are focused on U.S. consumer and producer price reports due later this week, which are expected to show a slight increase in inflationary pressures. The figures are among the last leading indicators before the Fed meets next week — its last policy decision before Donald Trump takes office in January. Treasury yields have fallen as traders have increased bets on another rate cut — a scenario that tends to benefit gold because it pays no interest.
Gold surged to an all-time high above $2,790 an ounce in October, supported by the Federal Reserve’s shift in monetary policy, as well as rising demand for safe-haven assets amid rising tensions in the Middle East and Ukraine. Prices have eased since then as the dollar strengthened following Donald Trump’s victory in the U.S. election, but remain 28% higher this year.
Spot gold rose 0.5% to $2,646.94 an ounce at 8:35 a.m. in London, after a 0.4% decline last week. The Bloomberg Dollar Spot Index was little changed, while silver, platinum and palladium all rose more than 1%.
Source: Bloomberg
