1,000 tons in 8-months: Why China is aggressively buying gold
What's the story
China's central bank, the People's Bank of China (PBOC), has been on a gold-buying spree for 23 consecutive months. The country imported a record amount of the precious metal in the first eight months of this year, spending $158.8 billion on more than 1,000 tons. This is higher than the total imports in all of 2025 and reflects China's strategy to reduce dollar dependency amid economic uncertainty.
Price fluctuations
Gold prices fell more than 8% in September
Despite China's unprecedented gold purchases, the price of the precious metal has fallen.
After hitting a record high of over $5,500 in January, gold prices fell more than 8% in September to around $4,176 per ounce.
Aakash Doshi, head of gold strategy at State Street Investment Management, predicts that strong demand will push gold prices up to between $4,750 and $5,500 per troy ounce by Q1 2027-end.
Strategic shift
Political reasons behind gold-buying spree
Carsten Menke, an analyst at Julius Baer Group, suggests that the China's main motive behind its gold-buying spree is political.
He cites "the weaponization of the US dollar and the related desire to be less dependent on US Treasuries as a reserve asset."
This comes after Western governments froze Russia's central bank assets following its 2022 invasion of Ukraine, highlighting how foreign-held reserves can be restricted during geopolitical tensions.
Market dynamics
Consumer demand driving gold purchases
China's gold market is also being driven by consumer demand.
With the real estate market in a multiyear slump, domestic investors are turning to gold jewelry, bars, and coins as an alternative store of wealth.
Ole Hansen, head of commodity strategy at Saxo Bank, notes that "the opportunity cost of holding gold is also much lower in China than in many Western markets."
Price support
Impact on global gold prices
China's demand for gold has provided a buffer against price pressures that would have otherwise pushed prices down further.
Ewa Manthey, commodities strategist at ING Bank, notes that "Chinese buying has become an important source of structural support for gold prices."
This is because central banks buy for the long term and are less sensitive to price changes than retail investors.