Gold companies operating in China ramped up their production levels during the first quarter of 2023. According to industry reports, the Chinese gold industry managed to recover its extraction levels, reaching numbers it saw before the Covid pandemic, with the country engaging in a record streak of purchasing gold during the last five months.
China Recovers Gold Production Levels During Q1
China managed to ramp up its gold extraction levels during the first quarter of 2023. Chinese companies have seen their production efforts rewarded during Q1 2023, as large mines managed to recover their numbers to pre-pandemic levels.
According to reports from the Gold Association of China quoted by Xinhua, the Chinese news agency, gold mines operated by the biggest mining companies in China produced 32.72 tons of the precious metal during Q1 2023, almost half of the gold produced in the country during that period.
China is regarded as the top gold producer in the world, producing 372 tons of gold in 2022, per China’s Gold Association numbers, defying the pessimistic projections of reports that pointed to a decline in this activity due to Covid complications, amidst other factors. However, last year’s numbers are far from the 453.5 tons produced by China in 2016, the highest number in its history.
Central Banks Keep Buying Gold
The recovery of the Chinese gold output is key for the country in a market where central banks have kept gold demand high. In March, the World Gold Council stated that central banks will likely keep buying gold this year, adding to their reserves even if the purchases do not reach the record levels registered during 2022.
Much of this demand is coming from China, which has added more than 100 tons of gold to its coffers during a five-month buying streak. China’s national gold reserve is estimated to be comprised of 2,068 tons. However, the biggest buyer of gold last year was the central bank of Turkey.
Analysts have speculated that this gold rush might be related to the recent de-dollarization movement that certain countries have been pushing in world markets. Reserves held by central banks in U.S. dollars fell to 47% in 2022, something that is being interpreted by some as a flight to safety to other currencies and gold amidst a geopolitical climate of uncertainty regarding dollar-based sanctions. Jan Nieuwenhuijs, a gold market analyst, has anticipated this flight to safety might take the price of a troy ounce of gold to $8,000 as banks convert historic levels of reserves to the precious metal.
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Author: Sergio Goschenko