China Accelerates gold buying spree, posts largest reserve jump since 2023

China’s central bank ramped up its gold purchases for a fifth consecutive month in July, adding the largest volume of bullion to its reserves in nearly three years as Beijing deepens a strategic pivot toward safer, dollar-independent assets.

Official data released on Friday showed the People’s Bank of China (PBOC) boosted its holdings by 640,000 fine troy ounces—roughly 20 metric tons—bringing total reserves to 76.08 million ounces by the end of the month. That marks the most substantial monthly increase since October 2023, when the central bank added 740,000 ounces.

The pace of accumulation has accelerated steadily since March, when the PBOC added just 160,000 ounces. June’s 480,000-ounce addition—previously the largest since 2023—was surpassed by July’s influx, underscoring a deepening commitment to the precious metal.

The buying spree now stretches to a 21st consecutive month, one of the longest sustained accumulation periods in modern Chinese monetary history. The total value of China’s official gold reserves rose to $306.35 billion at the end of July, up from $303.72 billion a month earlier, buoyed by both volume increases and a modest uptick in bullion prices.

Strategic de-dollarization gathers steam

Analysts view the relentless purchases as part of a broader, long-term effort by Beijing to diversify its $3.2 trillion foreign exchange reserves and reduce exposure to U.S. Treasury securities. Geopolitical tensions and the weaponization of the dollar in Western sanctions regimes have accelerated the shift.

Despite the recent buying, gold still accounts for a relatively small fraction of China’s total reserves compared with Western counterparts—the U.S. and Germany hold more than 70% of their reserves in bullion. This suggests Beijing still has considerable room to expand its holdings without significantly distorting its portfolio.

Global central bank demand remains a tailwind

China is not alone in its zeal. Central banks worldwide, particularly in emerging markets like Turkey, India, and Poland, have been net buyers of gold for several years. According to the World Gold Council, official sector demand has been a cornerstone of gold’s resilience, providing a structural floor under prices even as Western investors waver.

Gold prices rally as macro backdrop shifts

The sustained central bank demand helped propel spot gold prices 0.84% higher in July, snapping a four-month losing streak and posting the best monthly gain since February. On Friday, bullion was trading comfortably above $4,310 per ounce.

The rally was driven largely by softer-than-expected U.S. inflation data and falling crude oil prices, which prompted markets to scale back expectations for further Federal Reserve interest rate hikes. The cooling inflation outlook has boosted bets that the Fed will begin a rate-cutting cycle later this year, reducing the opportunity cost of holding non-yielding gold.

Outlook: A structural tailwind

Market strategists suggest that if the Fed pivots to easing monetary policy, gold could test fresh record highs. Meanwhile, China’s accelerating purchase rhythm is expected to remain a steady, structural tailwind for the market—one that buffers gold against short-term volatility regardless of daily trading shifts.

With China’s reserve diversification drive showing no signs of letting up and global geopolitical uncertainty persisting, the yellow metal appears entrenched as a cornerstone of Beijing’s economic security strategy for years to come.