China Ramps Up Gold Reserves as Market Appetite Grows

The People’s Bank of China has now extended its buying streak to 23 consecutive months, bringing total official holdings to 2,410 tonnes. According to Ray Jia, research head for China at the World Gold Council, this persistent official demand aligns with a broader trend of portfolio diversification among Chinese investors. As local equity markets falter and bond yields decline, the opportunity cost of holding gold has diminished, driving significant inflows into gold-backed ETFs. These funds reached a record 304 tonnes in total holdings by the end of September.

While wholesale demand via the Shanghai Gold Exchange saw a 48% month-over-month increase in September, the broader market remains sensitive to macroeconomic headwinds. High interest rates in the U.S. and a strengthening dollar pressured prices throughout the third quarter, tempering retail jewelry consumption. However, the recent Mid-Autumn Festival and National Day holiday provided a necessary catalyst, as lower price points encouraged consumers to engage in significant dip-buying of bars, coins, and jewelry. Market participants remain focused on how these seasonal trends will balance against ongoing inflationary concerns and the trajectory of Federal Reserve policy in the final months of the year.