China adds to state gold reserves for 10th consecutive month

China adds to state gold reserves for 10th consecutive month

In a significant development, China has continued its trend of adding to its state gold reserves for the 10th consecutive month, a move that underscores the country's strategic approach to managing financial risks and diversifying its foreign exchange reserves. This latest addition, which amounts to 225 tonnes, is part of a broader global trend where central banks are increasingly turning to gold as a hedge against currency devaluation and geopolitical instability.

According to the World Gold Council, China's 2023 gold purchase of 225 tonnes was its largest single-year addition since 1977 [1]. This substantial increase aligns with the country's goal of holding a significant portion of its international reserves in gold. The People's Bank of China's decision to maintain monthly gold purchases since 2022 reflects a strategic bet on the metal's resilience and its role as a long-term store of value.

The global gold market is experiencing a seismic shift, driven by central banks' relentless appetite for gold. In 2023, central banks added 1,037 tonnes of gold to their reserves, while in 2024, annual net purchases reached 1,045 tonnes—the third consecutive year exceeding 1,000 tonnes [2]. This trend is not confined to China; Poland, for instance, added 90 tonnes in 2024, bringing its total reserves to 420 tonnes, aligning with its goal of holding 20% of international reserves in gold [2].

The motivations behind these purchases are multifaceted. Gold's role as a crisis hedge and long-term store of value remains unmatched. Central banks in emerging markets, particularly in Asia and Eastern Europe, are diversifying away from dollar-dominated portfolios amid U.S. policy uncertainty and trade tensions. For example, the Reserve Bank of India added 22 tonnes in 2024, while Turkey and Hungary each purchased 4 tonnes in early 2025 [2].

Geopolitical uncertainties and the waning dominance of the U.S. dollar have also played a significant role in driving gold prices to new heights. By early 2025, gold prices surpassed $3,500 per ounce, fueled by central bank demand and geopolitical risks [3]. This record price signals a loss of confidence in fiat currencies and a renaissance of gold as a "currency of last resort."

While not all central banks are buyers, the broader trend of increasing gold holdings is clear. The World Gold Council estimates that 326 tonnes of gold were used in technology applications in 2024, driven by AI and semiconductor demand [3]. Meanwhile, investment demand via ETFs and physical bullion has rebounded, with gold ETFs seeing their first year of stable holdings since 2020 [4].

In conclusion, China's continued addition to its state gold reserves is part of a larger global trend where central banks are viewing gold as a crucial tool for financial stability and sovereignty. For investors, this represents a long-term opportunity as central bank demand is not only stabilizing gold prices but reshaping the very architecture of global finance.

References:
[1] Central Banks, [https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2023/central-banks]
[2] Central Banks - Gold Demand Trends Full Year 2024, [https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024/central-banks]
[3] The New Gold Story: Who's Buying, and Why, [https://www.wisdomtree.com/investments/blog/2025/04/24/the-new-gold-story-whos-buying-and-why]
[4] Gold Demand Trends: Full Year 2024, [https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024]