China’s central bank, the People’s Bank of China (PBOC), has recently resumed its gold accumulation strategy, marking the end of a six-month pause. In November, the PBOC added 160,000 fine troy ounces to its reserves, bringing the total to 72.96 million fine troy ounces. This momentum continued into December, with holdings increasing to 73.29 million fine troy ounces. These purchases highlight China’s commitment to diversifying its reserves and safeguarding against currency fluctuations.
Factors Behind Increased Gold Purchases
The surge in China’s gold reserves coincides with heightened geopolitical tensions in the Middle East and Ukraine, as well as the uncertainties surrounding the U.S. presidential election. These factors have boosted global demand for gold as a safe-haven asset, propelling spot gold prices to unprecedented levels. Domestically, China’s uneven economic recovery has further fueled demand for gold, with consumers favoring bullion bars and coins despite high prices.
Global Central Bank Gold Buying Trend
China’s activity aligns with a broader trend among central banks worldwide. In 2023, global central bank gold purchases reached 1,037 tons, approaching record levels from the previous year. This sustained buying underscores a shift in the global monetary framework, with experts like Rhona O’Connell from StoneX Financial Ltd. viewing these acquisitions as both strategic and symbolic.
Economic and Strategic Implications
China’s foreign exchange reserves also rose to $3.2457 trillion by the end of March, the highest level since December 2021, reflecting a cautious strategy to maintain stable reserves. As global markets anticipate U.S. interest rate cuts, the PBOC’s continued focus on gold accumulation serves as a hedge against economic and geopolitical risks