China added 25.8 tonnes of gold in October despite a global price slump, extending its buying streak to 24 months. Why is Beijing stockpiling gold; could its moves support prices?
According to World Gold Council (WGC) data, China was the largest publicly reported central bank gold buyer in the third quarter. Central banks worldwide purchased a net 321 tonnes of gold between July and September, the highest quarterly total since the fourth quarter of 2024. Continued central bank buying is helping support gold prices in the international market.Why Did Gold Prices Fall? Gold prices hit a year-low in October, marking their biggest monthly decline since the 2008 global financial crisis. Reports indicate that prices have fallen by more than a fifth since the Iran war began in late February. Although gold recovered somewhat after the US midterm elections this week, it remains below its earlier record highs. Rising energy prices have also weighed on the precious metal. Higher oil prices can fuel inflation, prompting expectations that central banks such as the US Federal Reserve may keep interest rates elevated for longer. Since gold does not offer interest income, prolonged high rates can reduce its appeal to investors and put pressure on prices.Central banks in several countries are reducing their exposure to US bonds while increasing their gold reserves. Between 2016 and 2026, China cut its US Treasury holdings from $1.19 trillion to $633.4 billion, while increasing its gold reserves from 1,842 tonnes to 2,346 tonnes. India, meanwhile, increased both its US bond holdings and gold reserves during the same period, with its gold holdings rising from 557 tonnes to 880 tonnes. Amit Pabari, Managing Director and CEO of CrForex Advisors, said China’s gold-buying strategy is part of its long-term effort to reduce dependence on the US dollar.Will China’s Gold Buying Push Prices Higher? China’s sustained gold purchases are also influencing consumer sentiment in the country. Some Chinese buyers are purchasing gold during price dips, expecting central bank demand to support prices over the long term. Reports suggest that consumers continued to show interest in buying gold even when prices were around $4,000 an ounce in October.
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China has once again surprised global markets with its gold-buying strategy. While gold prices have fallen sharply in the international market, the country has continued to add to its reserves, treating the price decline as an opportunity. China’s central bank has now bought gold for 24 consecutive months, reinforcing its long-term focus on the precious metal.
