Jakarta, CNBC Indonesia – The Central Bank of China (People’s Bank of China / PBOC) has been buying large quantities of gold over the past two months. The World Gold Council (WGC) on Friday (6/1/2023) reported that the central bank of China (PBoC) bought 32 tons of gold in November 2022.
The PBOC’s gold purchase is the first time since September 2019 or more than three years ago.
Then, at the end of last week, the PBoC announced the purchase of 30 tons of gold in December 2022. Thus, in two months, the PBoC bought 62 tons of gold.
Not only China, other central banks also bought gold last year. WGC reported that the purchase amount was the largest in 55 years.
As is known, 2023 promises to be a difficult year. A third of the world is expected to experience a recession.
“We estimate that a third of the world economy will be in recession,” IMF managing director Kristalina Georgieva told CBS, as quoted by Reuters on Monday (2/1/2023).
The main drivers of growth, namely the United States (US), Europe and China, all recorded weaker activity.
“2023 will be more difficult than last year because the economies of the US, EU and China will slow down”, he concluded.
When a recession hits, gold is one of the first ladies to invest. But in the last year the price of gold has actually collapsed.
According to Refinitiv data, gold recorded a decline of 0.22% for all of 2022 to 1,824 US dollars/troy ounce, and had even previously fallen to 1,613 US dollars/troy ounce, the lowest level since April 2022 .
The slight weakening in 2022 was helped by the gold price rally since November when China started buying the precious metal.
For all of November 2022, gold was up 8.3%, then up 3.2% again in December.
In the first week of 2023, world gold prices immediately increased by 2.3%.
With the world economy in gloom in 2023, the price of gold, which actually fell last year, certainly looks cheap. Also, with the projection of the easing of global monetary policy when a recession hits and inflation starts to fall, gold will certainly benefit greatly, its price can go up a lot.
The central bank that bought gold last year has certainly benefited, the value of its foreign exchange reserves has increased.
Meanwhile, BullionVault’s research chief Andrian Ash said the US and its allies had frozen Russia’s foreign exchange reserves in US dollars, which was one of the triggers for central banks to buy back gold.
“The central bank’s return to gold demonstrates the current geopolitical backdrop of distrust, doubt and uncertainty after the United States and allies froze Russia’s foreign exchange reserves,” Ash said as quoted. Financial TimesThursday (29/1/2022).
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