China has been purchasing gold at a rate ten times higher than officially disclosed, buying 55 tons in October compared to reported purchases of 5 tons, according to a recent Goldman Sachs analysis.
The bank’s data from London’s over-the-counter (OTC) market revealed significant discrepancies between China’s official reports and actual purchases, suggesting a strategy to conceal its diversification away from dollar assets, Goldman Sachs analysts wrote in their report.
“Surveys and history suggest that central banks in emerging markets buy gold to hedge against financial and geopolitical shocks,” Goldman analysts wrote, noting that concerns about such shocks have “structurally increased since the freezing of Russian reserves in 2022.”
The covert activity helped drive total central bank gold purchases to 64 tons in October, compared to a pre-2022 average of 17 tons, according to the bank’s projections. The surge in purchases comes as emerging market central banks reassess reserve risks following Western sanctions on Russia.
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Goldman Sachs analyst Lina Thomas projects gold prices will reach $3,000 per ounce by end-2025, citing continued central bank demand. The bank noted that even with just one more Federal Reserve rate cut, gold prices could still reach $2,890 per ounce.
A World Gold Council survey of 69 central banks conducted from February to April 2024 found 81% expect global central bank gold holdings to rise in the next 12 months, with none forecasting declines. The survey showed 29% of respondents plan to increase their own gold holdings, the highest proportion since the survey began in 2018.
Also read: Central Bank Gold-Buying In 2022 Was at A 55-Year High, WGC Says
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