Chinese speculators drive gold to new highs

According to data from the Shanghai Futures Exchange (SHFE), the number of long positions increased to 295,233 contracts, which is equivalent to 295 tons of gold and represents an increase of almost 50% since the end of September, and according to data from Bloomberg, the number of long positions also set a record in April .

Zhongcai Futures has accumulated more than $4 billion worth of long positions in SHFE gold futures, equivalent to more than 2% of China’s central bank’s gold reserves. On a peak day at the SHFE, gold trading volume exceeded 1.3 million lots, five times last year’s average. This may also explain the rise in the price of gold this month.

According to John Reade, chief market strategist of the World Gold Council, this indicates that Asian speculators are playing a decisive role in the development of the gold market. The activity observed on the Shanghai market – especially the doubled trading volume in March and April – points to the fact that Chinese investors are partly behind the rally.

After the outbreak of the Israeli conflict in October, gold continued to strengthen its status as a safe haven, and last week the yellow precious metal reached an all-time high of $2,431.

The price of gold is up 12% this year, but after the price rose to a new historical high last week, a sharp correction began.

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