China buys gold for 23rd straight month as reserve strategy shifts

China's central bank bought gold for a 23rd consecutive month in September, adding to a reserve strategy that analysts say is aimed at reducing reliance on US dollar assets. The People's Bank of China also made its largest monthly purchase in nearly three years, according to the supplied report, underscoring the scale of the recent buying. The move comes as Beijing continues to diversify its official reserves and as households in China have also increased demand for the metal.

The central bank added about 23 tonnes in September, taking its reported holdings to roughly 2,410 tonnes, according to the World Gold Council. Gold accounted for 8.5% of China's total official reserves at the end of September, up from 5.5% at the end of 2024. The report says the sustained purchases reflect a longer-term effort to spread risk across China's vast reserves and to reduce exposure to financial and geopolitical shocks.

Officials and analysts cited in the report point to several reasons for the shift, including high US debt and the freezing of assets by Western governments, which has highlighted the risks of holding large sums overseas. Gold stored domestically does not depend on access granted by another government, making it attractive as a reserve asset in periods of uncertainty. The report also notes that private demand has risen, with purchases of gold bars and coins in China 28.4% higher in the first half of 2026 than in the same period a year earlier.

The latest buying matters because reserve management by the world's second-largest economy can influence broader market sentiment and signal how major central banks are thinking about currency risk. China's accumulation of gold also comes at a time when the metal has been trading lower, with the report saying prices fell about 8.5% over the month. That decline was linked to a stronger dollar and higher returns on US government debt, which can make interest-bearing assets more attractive to investors.

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The People's Bank of China has been steadily building its gold holdings as part of a wider diversification effort. Central bank reserves are used to help countries meet international payments and respond to financial disruption, and they typically include foreign currencies, foreign government debt and gold. In China's case, the reported increase suggests a continued preference for assets that are less exposed to external political decisions.

The report also draws a distinction between official buying and household demand. Beijing is described as managing financial exposure, while private investors are seeking to preserve savings amid uncertainty over the domestic economy. That combination has helped sustain demand even as prices have eased, showing that the market is being supported by both policy and retail behaviour.

What remains unclear is how long the central bank will continue buying at this pace and whether the pace will change if market conditions shift further. The report does not give a forward guidance from the bank, and it is not clear how much of the recent increase reflects a temporary response to market volatility versus a longer-term reserve policy. Investors will be watching for the next monthly reserve update and for any sign that China's gold share continues to rise.

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