China's Central Bank Extends Gold Buying Streak to 23 Months

The People's Bank of China has continued its accumulation of gold reserves for the 23rd straight month, defying market forecasts that anticipated a slowdown in purchases as interest rates rose. This persistent buying trend underscores Beijing's strategic focus on asset diversification and risk mitigation amid complex economic conditions.

September Purchases and Reserve Totals

In September alone, the central bank added 740,000 ounces to its holdings, following a purchase of 650,000 ounces in August. These acquisitions have raised China's total gold reserve to 77.47 million ounces. The move is designed to secure safe-haven assets and hedge against economic risks and geopolitical volatility.

Despite the increased volume of physical gold held, the market value of China's total gold reserves declined to $323.52 billion in September from $350.08 billion in August. This drop reflects a global decrease in gold prices of more than 6% during the month.

Foreign Exchange Reserves Decline

Parallel to the gold transactions, China's foreign exchange reserves fell by $38.1 billion, settling at $3.4003 trillion. State administration attributed this reduction to fluctuations in exchange rates and declines in the value of global financial assets.

Strategic Rationale Behind Accumulation

The World Gold Council links China's appetite for the precious metal to specific domestic economic pressures. With real estate sectors contracting, bond yields falling, and ongoing geopolitical and economic risks, gold is viewed as the most reliable method for protecting future assets, irrespective of temporary price dips.

Data indicates that gold comprised 8% of China's total foreign exchange reserves by the end of June 2026, with the central bank holding 2,346 tonnes. This proportion highlights Beijing's commitment to strengthening its position in the yellow metal as part of a broader strategy to diversify reserve assets rather than relying solely on foreign currencies.

Divergence in Individual Investment Trends

Market data reveals a contrast between sovereign treasury activities and local consumer demand. In the second quarter of 2026, overall domestic demand for gold dropped by 41% year-on-year to 155 tonnes. For the first half of the year, total demand reached 518 tonnes, representing a 7% decline compared to the same period last year.

However, demand for gold bars and coins surged by 31% in the first half of the year, reaching 314 tonnes. This increase suggests that gold remains attractive as an investment tool even as aggregate consumption falls.

Global Central Bank Sentiment

China's actions align with broader international monetary policy trends. A survey conducted by the World Gold Council in June, involving 74 central banks, found that 45% intend to boost their gold reserves over the next twelve months. This represents the highest percentage recorded since the survey began in 2018.

Although Metals Fox predicts a 15% slowdown in global central bank purchases in 2026 to 720 tonnes, these levels remain elevated compared to pre-2022 figures.

Expert Analysis on Strategic Shifts

Saeed Embabi, Executive Director of the "I Sougha" platform for gold and jewelry trading, explained to "24" that continued central bank buying despite high interest rates signals a strategic shift in reserve management rather than a mere bet on price appreciation. He cited net central bank purchases of 863 tonnes in 2025, contrasting sharply with the annual average of 473 tonnes observed between 2010 and 2021.

Embabi noted that China exemplifies this trend by increasing reserves even when prices fall, reflecting a desire to diversify holdings, reduce dependence on foreign currencies, and hedge against sovereign debt risks, geopolitical tensions, and international sanctions. While higher real interest rates increase the cost of holding gold, he argued this does not diminish its strategic value as a risk-free asset.