Gold strengthens its strong gains as China returns to buying and tensions rise!

Gold prices recorded strong gains during trading on Monday, driven by increased demand for the yellow metal following reports confirming that the People's Bank of China has returned to purchasing gold for its reserves after a six-month hiatus.

Performance of Spot and Futures Gold Contracts

Futures gold contracts saw a strong increase of 1.09%, equivalent to approximately $30 per ounce, trading at $2,689 per ounce. Meanwhile, spot gold contracts rose by 1.33%, or about $35 per ounce, bringing the price to $2,668 per ounce.

Factors Influencing the Rise in Gold Prices:

The strong rise in gold prices can be attributed to several key factors, most notably the People's Bank of China resuming its gold purchases. Official data released by the People's Bank of China revealed that the central bank has resumed buying gold for its reserves in November after a six-month hiatus. This decision comes at a time when the People's Bank of China was considered the largest official buyer of gold globally in 2023.

According to the data, China's gold reserves slightly increased to 72.96 million ounces by the end of November, compared to 72.80 million ounces the previous month. Conversely, the value of China's gold reserves dropped to $193.43 billion, down from $199.06 billion at the end of October. This official data positively impacted gold prices.

Moreover, gold prices clearly benefited from heightened fears regarding geopolitical tensions in the Middle East, especially after the ousting of Syrian President Bashar al-Assad. Russian media confirmed that Assad arrived in Moscow after being granted asylum by Russia.

Additionally, Israeli forces managed to control several border areas with Syria, claiming it was necessary to ensure the safety of settlers in the Golan Heights. As the Middle East area becomes more volatile and fears regarding uncertainty grow, investors find purchasing gold to be a good opportunity to hedge against potential conflicts.

Performance of Other Metals

The gains were not limited to gold; other metals also saw significant increases. Silver recorded a rise of 3.76% to reach $32.775 per ounce. Meanwhile, platinum contracts increased by 2.88% to $960.70 per ounce, while palladium prices rose by 2.94%, reaching $994.03 per ounce.

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