China's gold consumption rose 6% in first quarter this year; what is driving the rally?

livemint.com:

Gold rate today jumps after disappointing US non-farm payroll data, slide in US dollar rate, Xi Jinping's Europe trip According reports, Chinese consumers have increasingly turned to gold amid waning confidence in conventional investment avenues such as real estate or stocks. Concurrently, the nation's central bank has consistently bolstered its gold reserves while reducing its holdings of U.S. debt.

Adding to this trend are Chinese speculators, who are wagering on further potential appreciation, intensifying market dynamics. China's significant influence in gold markets has been evident for some time. However, its impact has become even more noticeable during the recent bull run, which has seen a nearly 50% surge in the global price since late 2022.

Despite conditions that typically diminish gold's attractiveness as an investment, such as higher interest rates and a robust U.S. dollar, China has continued to reach new peaks in its dominance of the market. In the previous month, gold prices surged despite the Federal Reserve's indication of maintaining higher interest rates for an extended period.

Furthermore, its appreciation has persisted despite the strengthening of the dollar against nearly all major currencies globally this year. Although prices have retraced to approximately $2,300 per ounce, there's an emerging belief that economic factors no longer solely dictate the gold market, with Chinese buyers and investors' preferences playing a significant role. Also read: Gold and silver rate today on 06-05-2024: Check latest rates in your city "China is unquestionably driving the price of gold.