Ross Norman: China was the reason for gold's rise

He noted that the purchases that drove gold prices to 2050 or 2100 dollars were mostly high-quality purchases by Central Banks, which were rapidly adding to their reserves with the yellow precious metal.
“Central bank purchases are of high quality because they are unlikely to be sold again in the event of a significant price correction. They are very long-term - we could be talking about several generations,” Norman said. Chinese investors are also supportive of this growth momentum. “The Chinese retail sector is buying a lot, central banks are buying a lot. Institutional buying in exchange-traded funds is also high. In addition, China has had a Costco effect, with Generation Z and millennials buying gold - and, it has to be said, at big premiums - in gold bullion,” Norman continued.
All of these factors were in effect at the beginning of 2024, but something changed on March 1, when the gold price began to rise. “It became clear that there was a very important major player in the market that prompted the gold price to rise significantly,” Norman told us. “Spoiler - it was China again. Even more than we expected.”
He noted that the purchases were made by speculators on the Shanghai Futures Exchange (SHFE). “The Chinese have pounced speculatively on gold. They drove the price to an all-time high of $2,430, which is $100 above current levels. The market then corrected downward.”
He further said the following: “The reason for this was that exchanges, especially the Chinese exchanges (Shanghai Gold Exchange and SHFE), increased opening spreads significantly, making gold trading much more difficult. Coincidentally, the COMEX did the same thing at the same time. The exchanges are saying: the markets are too hot, calm down. We will make it more expensive for you to trade there.”
When that happened, interest from Chinese traders waned and the gold price fell. “In short, if you like, the gold price has risen, risen significantly, to about $2,100 an ounce, thanks to quality buying. The last $200 that came in from above is probably more vulnerable because it's forward buying,” the expert summarized.