Gold prices were higher this morning, buoyed – in part – by a recent new agreement in China.
The metal was 0.23% higher on its previous close at $1,285.15 a Troy ounce, rising again after a turbulent month in which the price swung between a high of $1,304.80 on 10 April and a low of $1,273.40 on 23 April.
Its rise mirrored almost exactly the fall in the dollar this morning, down 0.2% against the euro at €0.8899. The two assets vie for investor interest as safe-haven securities.
Marx would not have approved
In the longer term, a recent agreement between the industry body, the World Gold Council, and the Industrial and Commercial Bank of China (ICBC), the country’s largest bank, may be supporting the price.
The council noted: “After two decades of rapid development, China has become the world’s largest gold producer and consumer,” adding: “China’s gold industry is at a crossroad, looking towards the future.”
There was a time when official enthusiasm for the bullion industry would have appeared strange in a one-party Communist state. “Nature no more produces money than it does bankers or a rate of exchange,” Karl Marx said of the use of gold and silver as monetary assets.
He described both as being “negatively superfluous”.
But China started cooperating with the council in 2009 and, in the same year, licensed the first specialist precious-metals institution.
Now, the council and ICBC have agreed five main areas of cooperation, the first of which is to “promote investing in gold among institutional investors, in particular insurance and pension funds”.
Enhancing China’s influence
Next is the use of ICBC’s “platform advantages” to “design and develop new gold products and services for millennials”.
The third area relates to enhancing and promoting existing gold investment products, and developing new ones.
Next is the researching cross-border “gold policies and opportunities” and the enhancing of China’s influence in the global bullion market.
ICBC vice-president Jiong Tan said China was committed to a more open and professional environment for Chinese gold consumers.
Gold prices were a little lower this morning than a month ago. On 1 April gold was changing hands at $1,291.90; on 1 February, the metal was worth $1,320.75.
A year ago, on 1 May 2018, gold was selling for $1,309.20. During the intervening 12 months, it has touched a low of $1,176.70 on 17 August and a high of $1,345.75 on 20 February.