The price of gold reached a new record on Wednesday, February 5, trading at approximately $2,872 per ounce. The monthly increase shows a rise of 8.4% and the year-on-year increase is 40.3%. So far this year, the value has increased by more than $300. This increase is largely due to trade tensions between the United States and China, global uncertainty, and high investor demand. Gold has been rising more than 27% in 2024, driven by demand for safe haven assets, interest rate cuts, and purchases by central banks.
China is adopting measures similar to those of the United States by promoting gold ownership as a safe investment asset. According to analysts from Guotai Junan Securities, Chinese insurance companies lack options for long-term assets with stable returns, even though bars do not precisely offer that stability. Beijing has launched a pilot program that allows Chinese insurers to buy gold for the first time, thus releasing a significant amount of investment in this precious metal.
The China Financial Regulatory Administration has issued a notice about the Pilot Program for Insurance Funds Investing in the Gold Business. Major companies like PICC Property & Casualty and China Life Insurance now have the opportunity to invest up to 1% of their assets in gold bars. This program recently came into effect and could generate potential funds of 200 billion yuan (about $28 billion), according to estimates from Minsheng Securities.
Gold is becoming significant as a basic product in which Chinese insurers can invest, marking a significant change in their investment policy. At the market level, investments in gold could impact the supply, demand, and prices of the metal. As the pilot project expands, investments in gold and their influence in the market are expected to increase.
Gold production in the last quarter has exceeded expectations, reaching 1.08 million ounces. Meanwhile, silver has shown notable performance, reaching its highest level in three months, surpassing $32.3 per ounce, with a monthly return of 8% and a year-on-year increase of 44%.
Gold, whose name comes from the Latin "aurum" due to its luster, is one of the most universally valued metals. Since prehistoric times, it has been valued for its durability and malleability, used in jewelry, coins, rituals, and as a store of value. Gold symbolizes the enduring and unchangeable, and it still serves as a symbol of wealth for individuals and countries.
