Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
According to data recently released from the World Gold Council, the global gold price is being driven to an all-time high in April 2024 as China aggressively increases its gold reserves. In the first quarter of the year, the People’s Bank of China (China’s central bank) increased its gold reserves by 27 tonnes, having increased its gold holdings for 17 consecutive months.
After the gold price broke through above $2,400 per ounce, it sparked a wide-ranging discussion about the drivers of the price, and in an interview with Investing News Network, MetalsDaily.com’s Ross Norman explained China’s key role in the gold rally.
For starters, he noted that the key support behind gold prices holding steady at $2,050 or $2,100 per ounce is high-quality buying from central banks. This is high quality buying because central bank purchases are generally long-term and are unlikely to sell these gold assets, when the price retraces.
At the same time, the average Chinese consumer is attracted to gold, and institutional purchases of exchange-traded funds are strong. China’s Generation Z and millennials are flocking to buy gold, even at higher premiums, such as the ‘save gold beans’ craze on Chinese social media.
Norman says all these factors were in place earlier this year, but things changed when the price of gold started to take off on 1 March. There were heavyweight players in the gold market that were driving the market sharply higher, Norman reasoned, essentially identifying the buying as coming from speculators on the Shanghai Futures Exchange (SHFE).
Indeed, after the price of gold broke through the all-time high of $2,430 an ounce, exchanges, particularly those in China, the Shanghai Gold Exchange and the Shanghai Futures Exchange, raised initial margins dramatically, effectively putting a speed bump on gold trading. Since then, Chinese traders’ interest in gold has waned and the price has begun to fall back.
Norman believes that gold has moved higher, driven by quality buying, significantly higher to around $2,100. The last $200 rise on this basis could be considered more fragile as it was speculative futures buying that drove it.
However, analysts at Citigroup and Bank of America expect the price of gold to reach $3,000 per troy ounce within six to eighteen months, taking into account other favourable factors such as the imminent start of interest rate cuts by the Federal Reserve and support from geopolitical conflicts.
