People's Bank of China accelerates gold purchases amid falling jewelry demand

The People's Bank of China significantly increased its gold acquisitions in September, marking its largest monthly purchase in nearly three years. According to data from the World Gold Council, the central bank acquired approximately 23 tons of gold, bringing its official reserves to roughly 2,410 tons. Gold now constitutes 8.5% of China's official reserves, up from 5.5% at the end of 2024.

This institutional accumulation occurs as the domestic jewelry market faces a downturn due to record-high prices, which have exceeded US$3,500 per ounce. While retail demand for jewelry has collapsed under these costs, the central bank's systematic buying has compensated for the contraction, creating a net bullish effect on global prices.

Analysts suggest this strategy is part of a long-term effort to diversify reserves and reduce dependence on US dollar-denominated assets. This shift in risk management follows global precedents, such as the freezing of Russian central bank assets, highlighting a move toward assets that are less susceptible to external geopolitical pressures.