China's 15-Month Gold Buying Spree: 40k Ounces/Month Amid Record Volatility

China's central bank extended its gold buying spree for a 15th consecutive month in January, adding 40,000 fine troy ounces to its reserves. This deliberate, long-term strategy has built a massive holding of 74.19 million fine troy ounces (2,306.30 tonnes) by the end of last month.

This steady accumulation is part of a broader, resilient trend of central bank buying. Despite gold prices hitting record highs in 2025, total central bank purchases reached 863 tonnes for the year. That figure, while below the exceptional +1,000-tonne levels of previous years, remains significantly above the historical average and underscores a strategic shift away from Western reserve currencies.

The flow is now a key structural support. For all the volatility in the spot price, which saw wild swings from near $5,600 to lows below $4,400 in January, China's consistent monthly buying provides a floor. This 15-month pattern of accumulation, totaling over 27 tonnes in 2025 alone, demonstrates a commitment that is not swayed by short-term market turbulence.

The Price Action: Record Highs and Extreme Volatility

The market environment for gold has been defined by extreme, almost violent, price swings. In the first four weeks of 2026, the metal surged 30%. That speculative frenzy was followed by a brutal 10% single-day drop last week, the steepest fall in over 40 years. This volatility created a chaotic setup where one-week realized volatility shot above 90%.

The record high was set earlier this month, with spot gold scaling a peak of $5,224.95 per ounce. That move was directly fueled by a plunging U.S. dollar, which hit near four-year lows. The price action has been so severe that it has undermined gold's traditional role as a safe-haven anchor, with short-term investors forced to sell to cover losses in a supposed "safe" asset.

The current price reflects this turbulence. As of today, gold trades at $4,815 per ounce. That is down $233 from yesterday and up $1,959 from one year ago. The wild swings-from record highs to steep drops-highlight a market where liquidity and positioning are under intense pressure, far removed from the stable store of value narrative.

The Financial Impact: Reserve Value and Strategic Shift

The physical accumulation translates directly into massive monetary value. China's gold reserves are now worth $369.58 billion, a staggering $50.13 billion increase from the previous month. This surge in valuation is the direct result of the PBOC's steady buying, which has built a reserve of 74.19 million fine troy ounces.

This is a deliberate strategic shift. Gold is being used to diversify away from traditional foreign currency reserves, particularly U.S. dollars. By holding a non-sovereign, non-USD asset, China is hedging against geopolitical and financial risks, including potential sanctions or currency instability. The move is not about speculation but about building a more resilient, independent reserve base.

This trend is part of a broader central bank strategy. Gold is now the second-largest asset in global central bank reserves, trailing only the U.S. dollar. China's actions reinforce this structural shift, where gold's role as a long-term store of value and a geopolitical hedge is being prioritized over short-term price fluctuations.