China’s central bank continued to add to its gold reserves in March, extending its buying streak to 17 consecutive months and signaling that official demand for bullion remains firm even as gold prices come under heavy pressure.
Data released Tuesday showed that the People’s Bank of China (PBOC) increased its gold holdings by 160,000 troy ounces in March, roughly 5 tons, marking its largest monthly purchase in more than a year. Total gold reserves rose to 74.38 million fine troy ounces, up from 74.22 million ounces at the end of February. The move comes at a volatile moment for the gold market. Bullion fell 12% in March, its worst monthly performance since 2008, as the war in Iran drove investors toward the US dollar and prompted expectations that the Federal Reserve may be less likely to cut interest rates if inflation accelerates. Those factors weighed heavily on gold, which also faced pressure from investors selling the metal to cover losses in other assets. Even so, the PBOC’s latest purchase suggests that one of gold’s most important sources of support for central-bank demand remains intact.
Analysts say China’s continued gold accumulation reflects a longer-term strategy rather than a short-term response to price swings. Gold is widely seen as a hedge against geopolitical instability, currency volatility, and reliance on US dollar-denominated assets. “As a non-sovereign credit asset, gold cannot be frozen and operates independently of any monetary system, making it a strategic anchor against geopolitical and financial uncertainties,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times.
That rationale has become increasingly relevant amid a complex global environment marked by rising tensions in the Middle East, recurring trade frictions, and shifting monetary policy expectations. Many emerging-market central banks have increased their exposure to bullion since Russia invaded Ukraine in 2022, partly to diversify reserves and reduce vulnerability to external financial shocks.
Despite gold’s traditional safe-haven status, the metal struggled in March. The conflict involving Iran, along with inflation and growth concerns, strengthened the dollar and pushed up expectations for higher-for-longer interest rates in the US. This combination tends to undermine non-yielding assets such as gold.
The sharp decline also reduced the value of China’s gold reserves. According to PBOC data, the value of those holdings fell to $342.76 billion at the end of March, down from $387.59 billion a month earlier, marking the first drop since May 2025. Still, the market showed signs of stabilization following the release of the reserve data. Spot gold reversed earlier losses to trade nearly 1% higher, above $4,690 an ounce on Tuesday, as traders absorbed the PBOC update while continuing to monitor developments in the war in Iran. Gold had reached a record just below $5,600 an ounce in late January before retreating sharply.
China’s steady buying may help reinforce confidence in the gold market at a time when some central banks have moved in the opposite direction. Turkey’s central bank, for example, sold and swapped about 60 tons in March to help defend the lira.
Even with such exceptions, central banks remain a major force supporting bullion. According to the World Gold Council, central banks bought a net 25 tons in the first two months of the year. Much of that demand came from Poland, whose central bank added 20 tons in February. Analysts at ING Economics noted that continued buying by official institutions has helped support prices during periods of volatility and limit the downside when investor demand softens.
China’s latest reserve data also showed pressure on the country’s broader external holdings. Foreign exchange reserves stood at $3.3421 trillion at the end of March, down $85.7 billion, or 2.5%, from the end of February.
The State Administration of Foreign Exchange attributed the decline to a stronger US Dollar Index, changes in global monetary policy expectations, and falling prices for global financial assets. Exchange-rate translation effects also contributed to the drop. Still, Chinese officials said the domestic economy continued to post steady progress and that high-quality development would provide solid support for maintaining the overall stability of the country’s foreign exchange reserves.
For markets, the clearest message from March’s data is that China is still committed to building its gold stockpile despite a sharp drop in prices. The PBOC’s continued buying underscores gold’s role in Beijing’s reserve strategy: a store of value outside the traditional dollar-based financial system and a hedge against intensifying geopolitical and financial uncertainty. At a time when gold’s near-term outlook has been shaken by war, dollar strength, and interest-rate concerns, China’s latest purchase offers a reminder that official-sector demand remains one of the metal’s strongest long-term supports.