How China and Africa are reshaping the Gold World

A quiet battle is taking shape over who controls the price of gold. And Africa sits at the very heart of it.

For years, China has let investors trade paper gold contracts that let people bet on the metal’s price without ever owning a single bar. That is changing now.

The Industrial and Commercial Bank of China, the world’s biggest bank by assets, will stop retail gold trading on July 24. Bank of China and others are following suit.

The official reason: protecting everyday investors from wild price swings. Gold shot up to nearly $5,500 an ounce earlier this year, then crashed back below $4,000. Many small traders got burned.

But analysts see a deeper motive behind the move. By shutting down paper speculation, Beijing pushes gold pricing toward something real: physical metal that actually exists.

Building a physical gold system

A new gold futures clearing system launches in Hong Kong this July. Vaults in Shanghai will back the contracts with real bars.

The Shanghai Gold Exchange already requires physical delivery. New York’s futures market works differently. There, fewer than one percent of contracts ever turn into actual metal.

That difference matters enormously for Africa. A system that values physical gold lifts the worth of what the continent holds in the ground. And Africa holds a lot.

Africa’s underground wealth

The continent contains close to 40 percent of the world’s gold reserves still buried underground. Much of this metal has never been extracted. But global demand is tightening. The People’s Bank of China has bought gold for eighteen consecutive months. Official holdings now exceed 2,300 tons. Central banks worldwide purchased 244 tons in the first three months of this year alone.

African nations are also buying their own gold. Ghana, Tanzania, Zimbabwe, and Uganda now run programs to purchase domestic production using local currency.

Tanzania has built up 27.5 tons since September 2023. Ghana passed a Gold Reserve Act in February that channels mined gold into national reserves.

Source/ Thinkchina

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