China's Strategic Gold Buildup: A Catalyst for Global De-Dollarization and Safe-Haven Demand

In 2025, the People’s Bank of China (PBoC) has emerged as a pivotal player in the global gold market, with its strategic accumulation of gold reserves signaling a broader shift in monetary policy and geopolitical strategy. By July 2025, China’s official gold holdings had reached 2,300 tonnes, marking the ninth consecutive month of purchases and accounting for 6.5% of its total foreign exchange reserves [1]. This deliberate buildup is not merely a response to market dynamics but a calculated move to diversify reserves, hedge against geopolitical risks, and accelerate the de-dollarization of its financial system.

The De-Dollarization Imperative

China’s gold purchases are inextricably linked to its long-term strategy to reduce reliance on the U.S. dollar. As of Q2 2025, central banks globally added 166 tonnes of gold, though this marked a 33% decline from the previous quarter [1]. China’s contribution—6 tonnes in Q2—reflects a measured but persistent effort to rebalance its reserves. Analysts note that the PBoC’s actions align with a global trend of central banks, particularly in emerging markets, seeking to mitigate exposure to dollar-denominated assets amid U.S. fiscal uncertainty and geopolitical tensions [4].

A critical catalyst for this shift is the U.S.-China tariff war and the broader realignment of global trade networks. China’s collaboration with BRICS nations to explore a commodity-backed digital settlement currency further underscores its intent to bypass dollar-dominated systems [3]. Gold, as a non-sovereign asset, serves as both a hedge against inflation and a stabilizing force in a multipolar world order.

Geopolitical Diversification and Strategic Resilience

The PBoC’s gold accumulation is also a response to geopolitical uncertainties. In May 2024, despite official statements suggesting a pause in gold purchases, UK customs data revealed that the PBoC secretly acquired 53 tonnes of gold through London-based bullion banks [6]. This clandestine activity highlights the central bank’s urgency to strengthen reserves amid concerns over potential financial sanctions and the weaponization of the U.S. dollar.

Gold’s role in national security is further amplified by its use in defense technologies and rare earth minerals, which are critical for industrial and military resilience [1]. China’s strategic gold buildup thus transcends traditional monetary policy, embedding itself in a broader framework of economic and geopolitical self-sufficiency.

Institutionalizing De-Dollarization: Policy and Market Signals

The PBoC’s influence extends beyond sovereign reserves. In March 2025, the China Banking and Insurance Regulatory Commission (CBIRC) mandated that insurance companies allocate at least 1% of their assets to physical gold [1]. This directive institutionalizes de-dollarization by redirecting institutional capital into gold, a move analysts describe as a “systematic shift away from dollar-denominated assets” [1].

Simultaneously, the PBOC has promoted the digital yuan and yuan-based trade settlements, particularly with Russia and Middle Eastern partners [3]. These initiatives, paired with gold accumulation, create a dual-layered strategy to enhance financial sovereignty. As of July 2025, China’s gold reserves stood at 2,300.4 tonnes, with some experts suggesting actual holdings may be higher due to off-the-books purchases [6].

Market Implications and Investor Outlook

The PBoC’s actions have significant implications for global markets. J.P. Morgan Research projects gold prices to average $3,675/ounce by year-end 2025, with potential to reach $4,000/ounce by mid-2026, driven by sustained central bank demand [5]. Goldman Sachs has similarly raised its gold forecast to $3,700/ounce, citing structural support from reserve diversification [4]. For investors, these trends signal a structural shift in the gold market, with central banks acting as both price anchors and long-term buyers.

Conclusion

China’s strategic gold buildup is a cornerstone of its de-dollarization and geopolitical diversification efforts. By systematically increasing gold reserves, institutionalizing gold investment through regulatory mandates, and promoting alternative currency systems, the PBoC is reshaping the global monetary landscape. For investors, this represents not just a shift in asset allocation but a reconfiguration of power dynamics in international finance. As central banks continue to prioritize gold as a hedge against uncertainty, the era of dollar dominance may be drawing to a close.

Source:
[1] Central Bank Gold Buying Surge Continues Throughout 2025
https://discoveryalert.com.au/news/central-bank-gold-buying-2025-reserve-strategy/
[2] China's gold math: how far can reserve diversification go?
https://nai500.com/blog/2025/09/china-s-gold-math-how-far-can-reserve-diversification-go/
[3] How US & China Are Rewriting the Global Monetary System
https://discoveryalert.com.au/news/global-monetary-shift-2025-gold-influence-china/
[4] Gold Price Predictions 2025: XAU/USD Analysis, Outlook & Strategy
https://andromarkets.com/gold-price-predictions-2025-xauusd-analysis-outlook-strategy
[5] Gold price predictions from J.P. Morgan Research
https://www.jpmorgan.com/insights/global-research/commodities/gold-prices
[6] Central Bank Gold Buying Slowed in August | by Money Metals
https://moneymetalsexchange.medium.com/central-bank-gold-buying-slowed-in-august-9ee22296842c