The Valentine’s week brought hot prices for gold, which – for the ninth time this year – broke a historical record. There were also speculations about auditing American reserves of the precious metal. Meanwhile, China gives its largest insurance companies permission to invest in gold.
Gold continues its impressive run, hitting a record high for the ninth time this year. On Tuesday, February 11, the price of an ounce of gold reached a new ATH at $2942. The royal metal also recorded historical highs in Polish currency. The following days brought significant price fluctuations, and the new week of trading began at around $2900/oz and PLN 11,500/oz.
The geopolitical situation has a significant impact on the gold market. This particularly includes ongoing discussions about the conflict in Ukraine, as well as recent talks between Donald Trump and Vladimir Putin on the potential end of the war. In addition, tensions between the USA and China and speculations about the customs policy of the US President may also bring new impulses for the precious metals market.
Scott Bessent to scrutinise USA’s gold reserves?
An increased demand for physical gold in the United States is also significant. More and more of the precious metal is being imported not only from London but also from Asia, and COMEX records a record number of physical deliveries. The recently observed mass transport of the royal metal to the United States may have deeper implications than just fears of introducing tariffs.
There is speculation that this may herald the first comprehensive audit of US gold reserves and potential changes in American monetary policy since the 1940s. This is particularly important as the United States has the largest gold reserves in the world – 8133.5 tons, and their official valuation remains frozen at $42.22 per ounce, a value not updated since the gold standard was suspended.
This means that in the books of the Federal Reserve, gold is worth almost 70 times less than its current market price. According to the World Gold Council, at the current valuation, gold would account for 75% of the value of US reserves. Scott Bessent, the new US Treasury Secretary and former hedge fund manager, known for his positive attitude towards gold, may play a key role in the upcoming changes.
China gives the green light for insurers to buy gold
Meanwhile, in China, for the first time in history, insurance companies have been given permission to place their capital in gold as part of a pilot program. Ten selected companies, including the two largest insurers in China, will be able to invest up to 1% of their assets in the precious metal. This decision can significantly impact global demand for the royal metal.
According to Minsheng Securities Co.’s estimates, this could result in a demand of up to $27.4 billion, translating into additional purchases of up to 320 tons of metal by Chinese insurers. This is about 6% of the annual world demand, which is a comparable, or even higher amount than the annual extraction of the royal metal in Russia (310 tons in 2024) and close to the production in China (380 tons).
The program, supervised by the Shanghai Gold Exchange, aims to further strengthen China’s role in the global gold market. At the LBMA 2024 Precious Metals Conference, the vice-president of the SGE, Dr Zenghui, underlined that the interest of insurance companies in gold is enormous. This is another step China is taking towards diversifying its reserves and strengthening control over the precious metals market.
Michał Tekliński, a gold market expert from Goldsaver.pl, Goldenmark Group
Source: https://managerplus.pl/rosnie-cena-zlota-i-popyt-z-chin-audyt-rezerw-usa-na-horyzoncie-25558
