A pilot program in China that allows insurers to buy gold for the first time could release billions of dollars of investment in metal, adding more impulse to a record demonstration. Prices reach a new peak.

Ten insurance companies, including Picc Property & Casualty Co. and China Life Insurance Co., two of the largest in China, can invest up to 1% of their linges assets, in a program that entered into force last Friday. That would translate into a potential of 200 billion yuan ($ 27.4 billion) of funds, said Minsheng Securities Co. in a note.

Gold has been one of the strongest products of the New Year, as well as in 2024, with metal reaching successive records. This extended elevation has been driven by the Reduction Rate of the Federal Reserve of the United States and purchases in the Central Bank, including China’s purchases. Donald Trump’s second term as president of the United States has also added an additional driver, with merchants struggling to adapt to his disruptive movements in commerce.

The change in politics in China could be a sign that the authorities recognize the shortage of investment options in the largest economy in Asia, and the need for alternatives in the midst of a recession of property and an economic fall.

“Insurance companies lack options for assets in the middle and long term with stable yields,” said Gueta Junan values ​​led by Liu Xinqi, although Bullion generally does not offer that.

The adjustment of the policy makes gold the first product in which Chinese insurers have explicitly allowed to invest. China has restricted insurance funds to take positions in assets without “stable cash yields” and limits the amount they can put in bonds and actions.

At this stage, the demand for gold insurers can take time to materialize.

“We are more likely to see accumulations when price manifestations stop,” said Yuxuan Tang, a global market strategist in JPMorgan Private Bank. Institutional investors, such as insurers, are sensitive to prices due to their focus on yields, he said.

Spot Gold was negotiated in a record exceeding $ 2,898 per ounce on Monday.

Copyright 2025 Bloomberg.

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