China’s central bank expanded its gold reserves for a 21st consecutive month in July, making its largest monthly purchase since October 2023 as Beijing continued to diversify its reserve assets amid global financial and geopolitical uncertainty.
Official gold holdings at the People’s Bank of China rose to 76.08 million fine troy ounces at the end of July, up from 75.44 million ounces in June, according to data released on Friday. The increase of 640,000 ounces, equivalent to nearly 20 metric tons, brought China’s total official gold holdings to approximately 2,366 tons. It was the biggest monthly addition since October 2023, when reserves increased by 740,000 ounces.
The PBOC has increased the pace of its gold purchases in recent months. It added 160,000 ounces in March and 480,000 ounces in June, or about 15 metric tons, before stepping up purchases again in July. The value of China’s gold reserves rose to $306.35 billion at the end of July from $303.72 billion a month earlier, reflecting both the additional bullion and higher market prices. The sustained buying highlights China’s efforts to diversify its reserve assets and reduce exposure to financial and geopolitical risks.
China’s purchases are part of a broader revival in central bank demand for gold. Central banks worldwide bought 289 metric tons of bullion in the second quarter, an increase of more than 60 percent from a year earlier and above the historical average. Ray Jia, head of research for Asia-Pacific excluding India at the World Gold Council, said central banks may adjust the pace of their purchases in response to short-term market conditions. However, their principal motivations remain protection against geopolitical risks and greater diversification of reserves. “While some central banks may tactically adjust the pace of gold purchases based on prices in the short term, our survey shows that hedging against geopolitical risks and pursuing reserve diversification remain their main objectives,” Jia said. He added that gold prices were not among central banks’ primary considerations when making long-term purchasing decisions.
Gold prices rose 0.84 percent in July, snapping four consecutive months of declines and recording their largest monthly increase since February. The recovery was supported by softer US inflation data and easing oil prices, which led traders to scale back expectations for further interest-rate increases by the Federal Reserve. Gold remained supported above $4,000 an ounce after retreating from record levels earlier this year. Spot gold rose as much as 1.8 percent to more than $4,316 an ounce following the release of China’s reserve data, reaching its highest level since mid-June.
China’s broader foreign exchange reserves also remained stable in July. The State Administration of Foreign Exchange said reserves stood at $3.4188 trillion at the end of the month, an increase of $2.5 billion, or 0.07 percent, from the end of June. SAFE attributed the rise to the combined effects of currency conversion and changes in global asset prices. The US dollar index declined during July, while prices of major international financial assets showed mixed performance. The weaker dollar increased the reported value of China’s reserves held in other currencies when converted into US dollars.
SAFE said China’s economy continued to show resilience and vitality as its growth drivers shifted toward new engines. These conditions, the agency added, should help keep the country’s foreign exchange reserves broadly stable. The increase in both gold holdings and foreign exchange reserves underscores Beijing’s effort to maintain a stable reserve position while gradually expanding its exposure to bullion. China has also sought to develop its domestic precious-metals market and strengthen Hong Kong’s role as an international center for gold trading and storage.
China’s continued gold purchases come amid elevated geopolitical tensions, currency volatility, and uncertainty over the direction of global interest rates. Gold is widely viewed as a safe-haven asset and a tool for reducing reliance on traditional reserve currencies. By increasing its bullion holdings while maintaining more than $3.4 trillion in foreign exchange reserves, China is seeking to strengthen the resilience and diversification of its reserve portfolio. The July figures suggest that gold will remain an important component of that strategy, even as market prices remain at historically high levels.
