China drives physical gold market shift, targeting Africa's reserves

China is moving to replace paper gold trading with a physical‑metal based system. Major state‑owned banks, including the Industrial and Commercial Bank of China, will cease retail paper gold trades by July 2026, while a new gold‑futures clearing platform anchored in Hong Kong and backed by Shanghai vaults is set to launch. The People’s Bank of China has added gold to its reserves for eighteen consecutive months, bringing official holdings above 2,300 tons, and the country is establishing yuan‑settlement rails across the African continent.

Africa holds roughly 40 % of the world’s unmined gold. Several African central banks – Ghana, Tanzania, Zimbabwe and Uganda – are buying domestic production and paying in local currency, bolstering national reserves. By channeling pricing toward real metal, China aims to tighten global gold supply, lift the value of African ore, and reduce reliance on the US dollar. The shift has already altered reserve composition: gold overtook US Treasury bonds as the largest reserve asset by value in late 2025.

Analysts view the strategy as part of a broader “dedollarization” effort, using gold’s universal appeal to create a parallel financial infrastructure less exposed to US‑led sanctions.