Gold recently recorded its worst quarterly performance in over a decade, prompting notable activity from China’s central bank. In June, the People’s Bank of China acquired 480,000 troy ounces, approximately 14.93 tonnes, marking its largest monthly purchase since late 2023. This acquisition is part of a continuing trend, with the bank now holding nearly 75.44 million ounces, accumulated over the past 20 months.
The acquisition highlights a strategic response to declining gold prices, which fell over 11% in June—the steepest drop since October 2008. As the dollar strengthened and interest rates were adjusted, Western institutional investors reduced their gold holdings, while sovereign buyers, including China, increased theirs. Compared to the 65% rise in gold prices in 2025, this recent slump appears as a recalibration rather than a fundamental devaluation of the asset.
Analysts note that gold constitutes around 8.8% of China’s official reserves. Interestingly, a recent European Central Bank study indicated gold now represents 27% of global reserve assets, surpassing US Treasuries for the first time since 1996. This shift has stirred speculation about China’s potential efforts to establish a monetary framework less reliant on the US dollar.
In addition to accumulating physical gold, China has been investing heavily in African gold production. Zijin Mining, for instance, plans to acquire approximately $4 billion worth of assets from Allied Gold, further solidifying its presence in the region.
As exploration for new discoveries declines, investments tend to focus on established operations. The World Gold Council’s recent survey revealed that a majority of central banks anticipate an increase in global gold holdings over the next year.
Why this story matters
- China’s increasing gold purchases signal a strategic shift in global monetary policy and reserve management.
Key takeaway
- Despite recent price drops, central banks are moving to accumulate gold as a buffer against dollar volatility.
Opposing viewpoint
- Some analysts caution that chasing gold may not yield the returns expected, given current economic uncertainties and potentially lower production levels ahead.
