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The great Chinese gold rush: Why investors are scooping up the metal
The central bank and retail investors are piling in. The rush goes beyond a diversification away from Uncle Sam.
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Chinese retail investors have sought gold as a way to safeguard their assets against a backdrop of domestic economic uncertainty and depreciation of the yuan.
PHOTO: BLOOMBERG
Bernard Aw
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The price of gold futures hit a record high of US$2,438.50 on May 25. The frenzy for the yellow metal has been a roller-coaster ride, with the price since falling back from those heights.
As with the 1980s gold rally, there are similar factors such as high inflation in the US leading to interest rate rises. Back then, this slowed the economy there and caused a recession. However, this time around, despite high inflation and interest rates, the “R” word has not materialised. The US economy has proven remarkably resilient, remaining an important source of global economic strength.
