Jakarta, GIC Trade – Global gold prices are at their highest level in seven months, driven in part by the People's Bank of China's (PBOC) growing interest in the precious metal.

In an update published Saturday, the PBOC said it would increase its gold reserves by 30 tonnes in December, following a 32-ton purchase in November, and the first officially recorded purchase since September 2019.
 
China’s gold reserves currently stand at 2,010 tonnes. Some analysts say that could continue to support gold prices near $1,900 an ounce.
 
"It's bullish when the world's second-largest economy buys that much gold," said Jim Wyckoff, senior technical analyst at Kitco.com. He said the market views central bank gold purchases as "smart money."
 
However, not all analysts see China's purchases as a game-changer for gold. Marc Chandler, managing director of Bannockburn Global Forex, said China's gold holdings still play a small role in the total reserves of other central banks.
 
China’s continued buying comes in response to other central banks that have maintained their strong appetite for the precious metal.
Meanwhile, Krishan Gopaul, senior market analyst for Europe, the Middle East and Asia at the World Gold Council, noted that central banks bought 673 tonnes of gold between the first and third quarters of 2022. In a report published last week, Gopaul said central banks bought 50 tonnes in November.
 
Alongside China, Turkey’s central bank added 19 tonnes of gold to its reserves and the Central Bank of the Kyrgyz Republic bought 3 tonnes. Analysts expect central banks to continue buying gold into 2023 as they diversify away from the US dollar.
 
In a recent interview with Kitco News, Sean Fieler, who is the owner and chief investment officer of Equinox Partners, said that central bank gold demand in 2022 is a game changer for the gold market and shows investors that there is real value in the precious metals market.

Fieler also added that China's gold reserves are still very low, and there is still room for further purchases.

Fundamentally, the purchase of gold by the Chinese central bank and other central banks has pushed the world gold price higher. Then how about technically, see the following analysis:

 Technical Analysis



To continue the uptrend or bullish, the gold price needs to pass through the 1881.30 area again, which was the previous highest price and continue to the third resistance at the 1892.90 level.

Meanwhile, to change the bias to bearish, it is necessary to break the 1865.00 area first with the next target at the 1850.00 level. A decline or correction in gold prices is potential amidst the RSI and MACD indicators which are already in the overbought area.

This analysis is a fundamental and technical view used by the author, not a suggestion or invitation. For more information click the image below or click here.