China's Gold Push Signals a Quiet Shift Away From the Dollar

China’s central bank continued its gold acquisition campaign in August, marking the 10th consecutive month of purchases, as it seeks to diversify its foreign exchange reserves away from the U.S. dollar. The People’s Bank of China (PBOC) increased its gold holdings by 0.06 million troy ounces to 74.02 million troy ounces at the end of the month, according to data released on September 7, 2025 [2]. This represents a cumulative addition of 1.22 million troy ounces since November 2024.

The ongoing purchases reflect a strategic shift in reserve management, driven by growing concerns over global economic instability and the potential impact of U.S. monetary policy. Analysts suggest the move is part of a broader effort to reduce reliance on the greenback and strengthen the resilience of China’s reserves in the face of geopolitical and financial uncertainties [1].

Gold prices have surged this year, climbing more than 30% to above $3,500 an ounce, and hitting record highs. Adrian Ash, head of research at BullionVault, noted that while China’s gold purchases have slowed in 2025, the PBOC has continued to add bullion at increasingly higher prices [2]. This trend underscores a growing institutional confidence in gold as a long-term store of value and a hedge against inflation and currency devaluation.

On a global scale, central banks have been increasing their gold reserves, albeit at a slower pace due to elevated prices. The World Gold Council, in its latest report, stated that geopolitical risks continue to underpin demand for gold from central banks and other official institutions [1]. This aligns with China’s approach, which has been consistent with a broader global trend of monetary diversification.

Domestically, gold demand in China has remained mixed. While institutional appetite has remained strong, consumer demand has softened due to high prices. Some dealers have started offering discounts relative to global benchmarks to stimulate retail interest [2]. This highlights a potential challenge for China’s gold market as it seeks to balance its official strategy with private sector dynamics.

The PBOC’s gold reserves, now valued at $253.84 billion as of the end of August, have increased significantly from $243.99 billion in July [2]. This growth in value is partly due to the rising price of gold, which has provided an inflationary tailwind for the central bank’s holdings. Analysts suggest that the continued accumulation of gold by the PBOC may influence investor sentiment in the domestic gold market, reinforcing confidence in the metal as a stable and safe asset [2].

Source:

[1] China's Central Bank Extends Gold Buying Spree to 10 Months (https://finance.yahoo.com/news/china-central-bank-extends-gold-023209944.html)

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