Several Chinese banks have received new gold import quotas from the central bank, signaling expectations of renewed demand despite record-high prices, according to four sources familiar with the matter, speaking to Reuters. The People's Bank of China (PBOC) issued these quotas in August after a two-month pause, which was primarily due to slower physical demand amid a strong market.

Spot gold has surged 21% this year, reaching consecutive record highs and peaking at $2,500.99 per ounce by 1354 GMT on Friday, driven by a weakening dollar and growing market anticipation of U.S. monetary easing in September. Analysts suggest that a resurgence in Chinese demand, a key driver of the March-April bullion rally, could further push prices higher.

"The quotas have been granted, but with the local premium to offshore prices being low, there's no certainty they will be utilized until conditions improve," one source noted. "While jewelry demand remains weak, investment demand is robust," the source added, said the report.

China has a history of reducing gold import quotas when the yuan is weak against the dollar. However, sources indicated that this year's pause was driven by the banks themselves due to subdued demand. 

Meanwhile, US stocks closed higher on Friday, marking their largest weekly percentage gains of the year as concerns over an economic downturn eased.

China's central bank did not add to its gold reserves for the third consecutive month in July, with gold holdings totaling 72.8 million fine troy ounces at the end of the month. The PBOC was the world's largest single buyer of gold in 2023, with net purchases of 7.23 million ounces, according to the World Gold Council (WGC).

In another sign of subdued demand, Chinese dealers were offering discounts of $8.5 to a $5 premium per ounce on international spot prices this week, compared to premiums as high as $18 last week.

(With inputs from Agencies)