China's Central Bank Continues Gold Buying Streak as Gold Prices Reach New High

Gold futures broke yet another record high settlement on Monday, thanks to central bank purchases driving up the price. However, while the precious metal continued to see gains, shares of mining companies fell behind in performance. Investors took note of Friday's robust jobs report, causing them to reassess the possibility of the Federal Reserve reducing interest rates this year.Jamie Dimon, CEO of J.P. Morgan Chase, issued a warning of potential rate spikes to 8% or higher in the years ahead.

Analysts at UBS raised their gold price forecast for the year-end by $250 to $2500/oz, expecting a surge in gold ETF holdings once the Federal Reserve starts cutting rates around mid-year. The front-month Comex gold for April delivery hit a new high of $2331.70/oz, marking its 11th gain in the last 13 sessions.

Silver also continued its winning streak for the eighth session in a row, closing at $27.712/oz, its best value since June 16, 2021. The People's Bank of China revealed a 0.2% increase in its bullion holdings to 72.74M troy oz last month, making it the 17th consecutive monthly rise in gold reserves for the central bank. Other emerging market nations, notably India, have also been boosting their reserves, with the World Gold Council noting growth in gold stocks for nine months in a row.

Evidence suggests that systematic commodity trading advisors and momentum-based algorithmic funds have been increasing their gold purchases, leading to a rise in futures trading volume, according to broker SP Angel. The Commitment of Traders weekly report indicated that gold long positions reached 178K contracts for the week ending April 2, the highest number seen since July 2020.