China has emerged as a major force behind the recent surge in gold prices, with its growing influence projected to surpass even that of the U.S. dollar, according to a top economist.

China Buys Up Gold

“China is playing a key role in the ongoing rise in gold prices because of central bank buying, arbitrage trading, and increased speculative and safe-haven demand among Chinese households,” Torsten Slok, the chief economist at Apollo Global Management, said on his blog The Daily Spark.

Slok suggested that in the face of global macroeconomic uncertainty, it is likely that central banks worldwide will soon hold more gold than U.S. dollars, the current global reserve currency.

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His comments echo similar observations about China’s increasing influence in the gold market.

Last week, Steve Schoffstall, Director, ETF Product Management at Sprott Asset Management, told Benzinga: “Countries view gold as a way to get around economic sanctions.”

Venture capitalist Chamath Palihapitiya previously noted that China’s relentless gold buying reflects a significant shift in global sentiment, with both governments and individuals seeking to hedge against mounting geopolitical and economic risks.

In July, it was reported that China’s central bank has been quietly amassing gold reserves since 2022, a move that could have significant implications for the global economy, particularly the U.S. dollar.

Gold Miners Hit Sharp Sell-Off

The recent surge in gold prices past $4,000 per ounce has been highly beneficial for gold miners, with spot prices up nearly 50% year-to-date. Market veteran Ed Yardeni has raised his outlook significantly and stated that gold prices could hit $5,000 by 2026 and $10,000 by 2030.

However, this trend took a sharp turn on Tuesday, with gold miners experiencing a significant sell-off following a plunge of over 5% in bullion prices in a single session. The spot price is still above $4,100 per ounce.

VanEck Gold Miners ETF (NYSE:GDX) plunged 9.42%, while shares of Newmont Corp. (NYSE: NEM), the world’s largest gold miner, also fell 9.03%, as per data from Benzinga Pro.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.