AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
China’s central bank and consumers are accelerating the pace of gold purchases as the price of gold delves into uncharted territory and sparks concerns of a possible price pullback. The People’s Bank of China (Central Bank) is pushing up its gold reserves to record levels amid concerns over uncertain economic growth prospects.
Analysts believe that the latest moves by China’s central bank and consumers are fuelling the commodity’s recent rally while providing downside protection against a price pullback.
Nikos Kavalis, managing director of precious metals consultancy Metals Focus, said strong levels of physical demand in China should help ease any price correction pressure.
Gold hit a new all-time high above $2,300 this week after the Federal Reserve said there would be three rate cuts in 2024. Research firm BMI recently raised its price target for gold to between $1,950 and $2,250 per ounce. Analysts point to strong economic data from the U.S. as a major risk factor, as it could slow the pace of central bank interest rate hikes. The firm said the main drivers for gold this year will be U.S. interest rates, dollar performance and geopolitics.
State Street Global Advisors, which manages the world’s largest spot gold ETF, is more bullish. The company said it expects gold prices to reach $2,200 to $2,400 once the Federal Reserve starts cutting interest rates later this year.
In the year of 2023, the People’s Bank of China bought more gold than any other central bank in the world, with net purchases of 225 metric tonnes, according to World Gold Council. It was the biggest expansion of China’s gold reserves since 1977. Chinese pension funds, insurance companies and other state-linked investors are also hoarding gold, according to market participants, but that part of the data is often not publicly available.
Official data shows that in the first two months of this year, China imported 367 metric tons of non-monetary gold, a 51% increase compared to the same period last year. During the lunar new year, sales of gold and jewelry products in China increased by 24% year-on-year.
According to the China Gold Association, the assets under management of gold ETFs in China reached $4 billion in January, marking a historical high. On March 15th, the stock closing price of Zijin Mining, one of China’s largest gold and mineral mining companies, reached a historical high.
John Reade, Chief Market Strategist at the World Gold Council, stated that the Chinese real estate industry is facing challenging times, coupled with stock market turmoil and a weakened currency. All these factors are encouraging Chinese investors to diversify their investments into gold.
