China's Expanding Gold Holdings Amid Geopolitical Tensions

China remains hungry for official gold purchases despite a pause in May and June. Its share of gold in reserves is low compared to other major economies. Geopolitical tensions, such as the Russia-Ukraine war, drive its demand. The People's Bank of China resumed significant gold buying since November 2022.

China's appetite for official gold purchases remains strong despite a brief pause in May and June. According to industry experts and policy insiders, China's gold holdings are relatively low compared to its vast reserves, prompting continued acquisitions amidst escalating geopolitical tensions.

Beijing's gold purchasing helped rally spot prices in April and May, but it remains sensitive to market prices. Despite interruptions, ongoing geopolitical risks are expected to keep China's diversification from U.S. dollar-denominated assets active. The People's Bank of China (PBOC) has been a significant player, reporting gold purchases after a three-year hiatus in November 2022.

The PBOC was the largest single gold buyer globally in 2023, with net purchases of 7.23 million ounces. This activity served as a catalyst for record-high gold prices in 2024. Analysts forecast China's gold demand to persist amid geopolitical uncertainties, influenced by the Russia-Ukraine conflict and antagonistic U.S.-China relations.

(With inputs from agencies.)