Lately, the flagship cryptocurrency has been gaining traction, with institutions and governments intensifying their efforts to own Bitcoin. Recently, Fed Chief Jamie Powell and other analysts shared that Bitcoin is not a competitor to the dollar; rather, it is a competitor to gold. Bitcoin shares numerous similarities with gold, including the persistent nature, scarcity, and difficulty of mining.
BRICS countries have also intensified their efforts to introduce their own currencies as part of a de-dollarization initiative. Decentralized finance, which tends towards Bitcoin, has been taken into account.
However, China is not convinced about legalizing crypto entities. The nation has chosen to take small steps, such as virtual tokens recently being regulated by Hong Kong’s stablecoin law. China has opted for gold as a reserve; in fact, in 2023, the PBOC was the world’s largest official gold consumer in the sector.
In a recent development, China’s central bank expanded its gold reserves in November, ending a six-month buying pause after prices for the precious metal soared to a record, official data from the People’s Bank of China (PBOC) showed. ).
In 2023, the People’s Bank of China (PBOC) was the world’s largest official buyer of gold. After pausing its 18-month buying streak in May, the PBOC could resume purchases, which could boost gold demand among Chinese investors. Notably, Chinese gold reserves rose to 72.96 million fine troy ounces at the end of November, up from 72.80 million the month before.
“The resumption will send a signal that the PBOC has become accustomed to these record high price levels and is prepared to build reserves no matter what,” said Ole Hansen, head of commodity strategy at Saxo Bank. Reuters report.
Gold hit a record high in October, driven by rising demand for ports amid tensions in the Middle East and Ukraine and uncertainty surrounding the recent US presidential election. The metal erased some gains after a Trump victory and geopolitical tensions in the Middle East showed signs of de-escalating.
Furthermore, Chinese consumers have reduced their demand for the precious metal as prices have risen nearly 30% so far this year. Although gold bars and coins have held their value through the first three quarters, retail sales of luxury goods such as jewelry have fallen as investors seek to protect their wealth from a weakening economy.
