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China extends gold-buying streak to 23 months as it moves away from dollar assets

Central bank and households are buying gold for different reasons, analysts say

By LineZotpaper
Published
Read Time3 min
China's central bank bought gold for a 23rd consecutive month in September, making its largest monthly purchase in nearly three years, as Beijing seeks to reduce its dependence on US dollar assets and shield its reserves from financial and geopolitical risk, analysts say. Private households are also buying gold, though their motivation is protecting savings amid uncertainty in the domestic economy.

China's central bank added approximately 23 tonnes of gold in September, bringing its reported holdings to about 2,410 tonnes, according to the World Gold Council. That was its largest monthly purchase since October 2023. Gold now accounts for 8.5 percent of China's total official reserves, up from 5.5 percent at the end of 2024.

The sustained buying points to a longer-term effort to spread the risk held in its vast reserves, which are typically made up of foreign currencies, foreign government debt and gold. A key objective is to reduce dependence on US government debt, known as Treasuries, according to Thu Lan Nguyen, head of commodity research at Commerzbank in Frankfurt.

"China's gold purchases are part of a broader effort to make its reserves more resilient," Nguyen told Al Jazeera.

The freezing by Western countries of roughly $300bn in Russian central bank overseas assets after Moscow's invasion of Ukraine in 2022 showed how reserves held abroad can quickly become inaccessible. Nguyen said China may worry that a future confrontation with Washington could expose some of its overseas assets to similar restrictions.

"Gold held domestically has a crucial advantage in this respect: it does not represent a claim on another country and is therefore much less exposed to sanctions or asset freezes," she said. She described the buying as "primarily risk management," citing geopolitical tensions and economic and fiscal risks, including US debt, which passed $40 trillion for the first time earlier this year.

Household demand has different drivers. Purchases of gold bars and coins were 28.4 percent higher in the first half of 2026 than in the same period last year, according to the China Gold Association. Private investors are seeking somewhere to preserve savings, while the central bank is managing its financial exposure.

The buying has continued even as prices have fallen, with gold down around 8.5 percent over the past month. The World Gold Council attributed the drop partly to a stronger dollar and higher returns on US government debt, which pay interest and can appear more attractive to private investors than gold, which does not.

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Analysis

Why This Matters

  • China is the world's second-largest economy and a major holder of US debt, so its shift away from dollar assets has implications for global currency markets and the cost of US government borrowing.
  • The trend reflects a broader move by emerging market and Global South economies to hold reserves that cannot be frozen or sanctioned by Western governments.
  • The different motivations of China's central bank and its households show both official and grassroots de-dollarisation are underway at the same time.

Background

Central banks hold reserves to meet international payments and respond to financial disruption, traditionally in foreign currencies, foreign government debt and gold. The freezing of roughly $300bn in Russian central bank assets by Western countries in 2022 was a turning point that highlighted the risks of holding money overseas. Gold stored domestically avoids that risk because it is not a claim on another government. For Chinese households, gold bars and coins have become a store of value at a time of domestic economic uncertainty, even though gold pays no interest and its price can be volatile.

Key Perspectives

People's Bank of China: Buying gold is a long-term reserve diversification strategy, making official holdings less exposed to US policy decisions and asset freezes. Chinese households: Private buyers are focused on preserving savings, driving a 28.4 percent jump in gold bar and coin purchases in the first half of 2026. Commodity analysts: The purchases are primarily risk management, balancing exposure to US debt, geopolitical tensions and fiscal risks, including Washington's rising debt load. Critics and skeptics: Gold is an unproductive asset that pays no interest, and recent price declines show it can underperform when the dollar strengthens and US Treasuries offer higher returns.

What to Watch

  • Monthly central bank gold purchase figures to see whether the buying streak extends or slows.
  • The trajectory of US debt and Treasury yields, which shape the relative appeal of dollar assets versus gold.
  • Geopolitical developments involving Washington and Beijing that could accelerate or slow China's reserve diversification.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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