China’s central bank extended its gold-buying streak for a 10th straight month in August, part of a broader rush into the precious metal by global central banks that has lifted prices to new heights.
The move came as Beijing attempts to further diversify its reserves at a time of mounting geopolitical risks and lingering doubts over the long-term stability of assets backed by the US dollar.
China’s foreign exchange regulator said the country’s gold holdings rose to 74.02 million ounces at the end of August, an increase of 60,000 ounces from July. The jump helped push Comex gold futures to US$3,639.8 an ounce on Sunday, up 37.9 per cent this year.
Compared to the previous month, China’s gold reserves rose by US$9.9 billion to US$253.8 billion in August, raising their share of the country’s total foreign exchange reserves by 0.23 percentage points to a record 7.64 per cent.
Tavi Costa, a macro strategist at Crescat Capital, posted last week on his LinkedIn account that “foreign central banks now officially hold more gold than US Treasuries for the first time since 1996,” calling the shift “likely the beginning of one of the most significant global rebalancings we’ve experienced in recent history.”
Official gold reserves rose by 166 tonnes globally in the second quarter, according to the World Gold Council, which noted that annual buying has topped 1,000 tonnes for three consecutive years since 2022.
In a June survey, 95 per cent of the central banks polled by the council said they expected global gold reserves to increase over the next 12 months – the highest share since the annual canvass began in 2019 – and 43 per cent said they would increase their stocks.
The council also said global gold demand, including over-the-counter investment, climbed 3 per cent year-on-year to 1,249 tonnes in the second quarter of 2025. In value terms, total demand surged 45 per cent to US$132 billion.
According to a report from the European Central Bank in June, gold had overtaken the euro as the world’s second-largest reserve asset.
The shift accelerated after the beginning of the Russia-Ukraine war, when nearly half of Moscow’s foreign exchange reserves were frozen by Western sanctions – a move that sent shock waves through the Russian economy but also underscored the vulnerability of US dollar holdings.
Since then, many central banks have reassessed the security of their reserves, turning to gold as the “ultimate currency” and a safe haven investment.
Central banks’ purchases of gold have increased fivefold since the war began, according to a report by Goldman Sachs Research published earlier this year, and demand from governments is expected to remain high for some time, giving gold prices an “ongoing boost”.
Wang Qing, chief macro analyst at Golden Credit Rating, said in an interview with state financial outlet Securities Times on Sunday that China’s foreign reserves are currently at a “moderately ample” level and are expected to remain broadly stable, with continued gold purchases helping to bolster the credibility of the yuan and create favourable conditions for its “cautious” internationalisation.
As of the end of August, he said, gold accounted for a smaller share of China’s official foreign reserves than the global average of around 15 per cent.
“To optimise the international reserve structure, continued gold accumulation and a moderate reduction of US Treasury holdings will be necessary going forward,” Wang said, adding this “comfortable reserve cushion” will help keep the yuan’s exchange rate at a “reasonable and balanced” level.
Sources: SCMP
