China increases official gold reserves by 21 tonnes in September

The People’s Bank of China announced on Wednesday that the central bank increased its official gold reserves by 21 tonnes in September, marking its largest monthly increase in three years and extending a continuous buying streak to 23 consecutive months. According to State Administration of Foreign Exchange data, the massive purchase brought China’s total gold reserves to 2,196 tonnes as of the end of September. The buying spree comes as the country imports record amounts of the precious metal amid ongoing economic shifts.

China spent a record $158.8 billion importing more than 1,000 tonnes of gold in the first eight months of 2026, surpassing the $96.5 billion and 886 tonnes imported during all of 2025, according to customs data. Analysts note that Chinese households and companies are turning to gold as a safe haven amid a shaky domestic economy, a multiyear slump in the real estate market, and declining returns from bank deposits and bonds. Meanwhile, State Administration of Foreign Exchange data reported that China’s foreign exchange reserves stood at $3.4 trillion at the end of September, down $38.1 billion from the previous month.

Motivations Behind the Purchasing Spree

According to Carsten Menke, an analyst at Julius Baer Group, the People’s Bank of China’s primary motive is political, driven by the weaponization of the U.S. dollar and the related desire to be less dependent on U.S. Treasuries as a reserve asset. Following Western sanctions that froze Russia’s central bank assets in 2022, Beijing has sought to diversify its foreign-exchange reserves and offload U.S. Treasury holdings, which dropped to an 18-year low of $618 billion in July.

Menke also noted that Beijing plans to build a deeper domestic gold market, prompting the central bank to replenish inventories. He estimated that the central bank bought around 190 tonnes of gold this year through the end of August, a total that includes 110 tonnes of previously unreported purchases.

Impact on Global Markets and Prices

China’s relentless demand has provided critical support to bullion markets. Gold prices pulled back more than 8% in September to approximately $4,176 an ounce, following a record high above $5,500 in January. However, strong retail and central bank demand has helped the metal withstand downward pressures typically caused by buoyant U.S. yields.

Chinese buying has become an important source of structural support for gold prices, said Ewa Manthey, commodities strategist at ING Bank. Looking ahead, Aakash Doshi, head of gold strategy at State Street Investment Management, forecasts gold prices to climb back to a range of $4,750 to $5,500 per troy ounce by the end of the first quarter in 2027, buoyed by robust seasonal and structural demand.