Gold prices reached an all-time high of $2,941 per ounce on Tuesday as China began a pilot program allowing insurance companies to invest in the precious metal for the first time.
Beijing’s trial permits ten major insurers to allocate up to 1% of their assets to gold trading, creating potential investment flows of 200 billion yuan ($27.4 billion), according to Minsheng Securities calculations.
Industry leaders PICC Property & Casualty Co. and China Life Insurance Co. join eight other firms in the initiative, which began Friday. Chinese regulators authorized insurers to invest in commodities, while maintaining strict limits on other investment options.
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Multiple factors drive the current gold rally, including anticipated US Federal Reserve interest rate cuts, central bank purchases, and market adjustments to Donald Trump’s trade policies.
“Insurance companies lack options for mid- and long-term assets with stable yields,” Guotai Junan Securities analysts wrote, led by Liu Xinqi.
JPMorgan Private Bank’s global market strategist Yuxuan Tang expects cautious deployment of the new allowance. “We are more likely to see accumulations when price rallies take a pause,” Tang said, citing institutional investors’ focus on returns.
Beijing launched the gold initiative as part of an effort to counter property market weakness and boost economic growth.
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