The Chinese Dragon’s Infamous Gold Prices

Gold prices have surged internationally recently. China is buying large quantities of gold from other countries, aiming to compete with the US, currently the world’s leading economic superpower. China, struggling with a demand for US dollars, needs to boost the value of its national currency, the Yuan. Despite appearances, China’s economy has not fully recovered from the Covid pandemic’s impact. In the past three to four months, China has significantly increased its gold purchases. According to data from March, China imported 5 tonnes of gold and plans to buy around 27 tonnes in the first quarter of 2024. China’s total gold reserves are now at 2262 tonnes. These large-scale purchases have driven up global gold prices, affecting other countries. Consequently, gold prices in India have reached 70,000 rupees.

Before the Covid pandemic, China began rapidly purchasing various medical equipment, which became crucial as the pandemic worsened. The strength of a country’s economy is often gauged by its gold reserves; the more gold, the stronger the economy is perceived to be. In contrast, India has bought a modest 14 tonnes of gold in the last 3-4 months. Amid global turmoil and conflicts like the Russia-Ukraine and Iran-Israel wars, nations are striving to strengthen their economies by increasing their gold reserves. This trend is not limited to India but includes numerous countries worldwide, including Islamic nations, Latin American countries, African nations, and other developing or poor countries. The result is a widespread increase in gold prices globally. China’s substantial gold purchases are largely responsible for this surge in gold prices.