Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
On Tuesday, despite the strengthened U.S. dollar and rising U.S. Treasury yields curbing buyer interest in precious metals, gold and silver prices still rose, driven by news of another round of gold buying by the People’s Bank of China (PBoC). Spot gold futures recently climbed 0.44% to $2,647.80 per ounce.
In December 2024, the PBoC continued its gold purchase momentum from November, marking two consecutive months of increased gold reserves following a six-month hiatus. According to the latest report from the PBoC, China’s gold reserves at the end of December 2024 were 73.29 million ounces (approximately 2,279.58 tonnes), an increase of 330,000 ounces (approximately 10.26 tonnes) from November 2024.
Krishan Gopaul, Senior Analyst for EMEA at the World Gold Council, noted on social media that based on available data, the PBoC’s gold reserves increased by 44 tonnes to 2,280 tonnes throughout 2024, marking a third consecutive year of gold accumulation.
As for why the PBoC resumed buying gold, it could be related to the election of Donald Trump as U.S. President in November and anticipated changes to the global political and economic landscape. Additionally, gold prices may remain upwardly stable for a prolonged period, reducing the need to pause gold accumulation to control costs. Historical data suggests that the PBoC tends to buy gold during price dips rather than chasing high prices, further reinforcing this strategic move.
Investors and analysts are closely monitoring the PBoC’s gold-buying activities, as its purchases have been a critical factor driving gold prices to record highs throughout 2024. Last year, spot gold prices rose by 27.23%, the largest annual increase since 2010, reaching a peak of $2,789.95 per ounce. Recently, Goldman Sachs delayed its forecast for gold prices to reach $3,000 due to fewer expected rate cuts by the Federal Reserve, but steady central bank demand remains a key driver of long-term bullish expectations.
In addition to the PBoC, consumer demand for gold in China has also been robust, contrasting sharply with the waning investment interest in gold among Western investors. Carsten Fritsch, Precious Metals Analyst at Commerzbank, pointed out that the influence of gold ETFs on price trends has declined, while central bank gold purchases have grown more significant, especially over the past three years.
Looking forward, analysts expect the PBoC to continue increasing its gold reserves as part of broader efforts to diversify assets, reduce dependence on the U.S. dollar, and bolster the international credibility of the yuan. Despite the recent purchases, gold still accounts for only about 5% of China’s total foreign exchange reserves, significantly lower than the global average of roughly 15%. In comparison, gold accounts for 9.3% of the Reserve Bank of India’s holdings, with even higher percentages for the Bank of England and the European Central Bank.
George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, emphasized that China’s gold-buying spree is far from over. He highlighted that central bank demand, led by China, currently accounts for 15% of total end-user demand and expects this trend to potentially persist for the next 14 years.
