China is buying record amounts of gold this month primarily due to a combination of factors including rising global gold prices, strategic economic considerations, and increased domestic demand for gold as both an investment and a store of value. The People’s Bank of China (PBOC), China’s central bank, has been steadily increasing its gold reserves for 11 consecutive months, reflecting a deliberate policy to diversify its foreign reserves and reduce reliance on the US dollar[4].
One key reason behind China’s aggressive gold buying is the surge in global gold prices, which have reached new all-time highs this year. Gold has traditionally been viewed as a safe haven asset, especially during times of economic uncertainty, inflation concerns, and geopolitical tensions. The price of gold recently topped $4,000 per ounce for the first time, driven by factors such as trade tensions, inflation fears, and moves by various countries to de-dollarize their reserves. Analysts predict that gold prices could continue to rise significantly in the coming years, possibly reaching $5,000 per ounce in 2026 and even $10,000 before the end of the decade if current trends persist[3].
China’s domestic gold market has mirrored this global trend, with a notable increase in consumer demand during the country’s “Golden Week” holiday in early October. During this period, gold jewelry sales revenue surged by about 41.1 percent year-on-year, driven not only by traditional gift-giving but also by a growing number of investors buying gold for its value retention properties. Younger buyers in particular are showing more rational investment preferences, balancing aesthetic appeal with the desire to preserve wealth. This domestic buying spree is partly fueled by the sharp rise in gold prices, which has led some consumers to see gold as a profitable investment, as illustrated by a case where a buyer made a significant profit within just 20 days of purchasing gold jewelry[2].
From a strategic perspective, China’s central bank’s continued accumulation of gold is part of a broader effort to strengthen its financial security and reduce exposure to the US dollar. This move aligns with global trends where central banks, including those in Kazakhstan, Bulgaria, and Poland, have also increased their gold reserves recently. Despite the high price of gold potentially limiting some buying, central banks remain committed to increasing their gold holdings as a hedge against currency risks and economic instability[1].
In summary, China’s record gold purchases this month are driven by a mix of soaring global gold prices, increased domestic investment demand, and strategic reserve diversification by the central bank. These factors together reflect China’s approach to managing economic risks and capitalizing on gold’s role as a stable and valuable asset in uncertain times.