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Gold Hits New All-Time High Boosted by Tariff Threat & CCP Pilot Program

Gino Bruno D'Alessio•Monday, February 10, 2025•2 min read
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As a tariff war looms, China has released a pilot program allowing insurers to invest in gold.

  • Pilot program announced on Friday
  • Top insurers in China can allocate funds to gold
  • Gold hits new ATH

GOLD hit a new all-time today of $2,902 after the Chinese government announced a pilot program on Friday. The pilot program will allow Chinese insurers to buy gold and opens up a hard to quantify amount of demand.

Pilot Program for Gold Buying

The National Financial Regulatory Administration said that the program aims to optimize asset allocation for insurance companies.

The move will enhance asset liability management and allow insurers to hedge against market shocks.

The pilot program will allow insurers to invest in gold for medium- to long-term investment strategies. The program lists the top Chinese insurers including China Life Insurance and Ping An.

The program will allow insurers to invest in spot gold and other contracts, including:

  • Spot gold through the Shanghai Gold Exchange
  • Forward gold contracts
  • Gold swap contracts
  • Gold leasing

All of these markets directly or indirectly increase the demand for gold.

Gold Live Chart

GOLD

 

How Much Capital Will Flow into Gold

The amount of capital that will flow into gold from this new program is not easy to determine, but we can make an educated guess.

Firstly, it won’t be like opening the flood gates. The insurers will need to have qualified personnel in place to navigate the gold market efficiently.

Second, the allocation process would be most likely paced out and implemented over time. This type of allocation is standard practice among large institutions.

As of end-2024, Chinese insurers had $5 trillion in assets under management. Most asset managers would consider an allocation to gold of between 5% and 20%.

Those percentages equal between $250 billion and $1 trillion in additional demand for gold. Given the prudent nature of insurance companies , I believe their allocations to gold are more likely to be on the lower end of the range, around 5% of AUM.

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ABOUT THE AUTHOR See More
Gino Bruno D'Alessio
Gino D’Alessio is a professional Forex trader with 20+ years of experience in the financial markets as a broker-dealer. Having worked in New York and London, Gino is regularly featured on Seeking Alpha. He completed the CAIA program in 2015, which also gave great insight into global macro factors. His main focus is FX majors, indices and commodities.
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