China's central bank buys gold for 10 consecutive months to reduce reliance on US dollars in reserves

China's central bank buys gold for 10 consecutive months to reduce reliance on US dollars in reserves

China's central bank has extended its gold purchases into a 10th consecutive month, according to recent official data [1]. This move underscores the country's strategic efforts to diversify its foreign exchange reserves away from the US dollar, a trend that has been gaining momentum in recent years.

As of the end of August, China's gold reserves stood at 74.02 million fine troy ounces, up from 73.96 million at the end of July [1]. The value of these reserves increased to $253.84 billion from $243.99 billion, reflecting the rising prices of gold. This accumulation of gold by China's central bank is a significant development, especially given the global trend of gold as a safe haven asset during times of uncertainty.

Adrian Ash, head of research at online marketplace BullionVault, commented on China's gold purchases, stating, "While China's gold purchases have slowed so far in 2025, the People's Bank of China has added to its bullion reserves at ever higher prices. Beijing's continued accumulation is a clear signal of its faith in gold as a long-term reserve. That also supports confidence in gold among China's private households and investors" [1].

The demand for physical gold in China, the world's largest producer and consumer of the metal, has been weak this week due to high prices, with dealers offering discounts over the global benchmark to attract buyers [1]. However, the central bank's purchases suggest a strategic approach to building a diversified reserve portfolio.

This trend is part of a broader geopolitical strategy by China to reduce its reliance on the US dollar for reserves. By increasing its gold holdings, China is aligning with other countries that are also diversifying their foreign exchange reserves away from the US dollar, a move that could have significant implications for global financial markets.

References:

[1] https://www.business-standard.com/world-news/china-s-central-bank-buys-gold-in-august-for-10th-consecutive-month-125090700087_1.html