Gold prices are skyrocketing. But despite this, China is not stopping buying. China’s central bank has been buying gold for 22 consecutive months. The People’s Bank of China bought about 20 tons of gold in August. This gold buying by China has now become a topic of discussion all over the world. Because even when the price of gold is increasing, China is increasing its gold reserves. It seems that China will buy all the gold in the world and close its treasury. What is behind such a large amount of Chinese gold buying or some big plan for the future? And let’s find out whether India will be affected by this or not.
China bought the most gold after 3 years
According to the data of the People’s Bank of China or PBOC, China’s gold reserves increased by 650,000 ounces in August. The big thing is, this is China’s largest monthly gold purchase in almost three years. China bought 740,000 ounces of gold in October 2023. Then, the purchase in August 2026 was the highest. This gold buying by China is not a one- or two-month event. For 22 consecutive months, the PBOC has been increasing its gold reserves. By the end of August, the total gold reserves in China reached 76.73 million ounces (about 2,386.57 tons). In addition, China bought 640,000 ounces of gold in July and 480,000 ounces in June. That is, the pace of China’s gold purchases has increased in the last few months.
Why is China buying gold?
Now the biggest question is why is China continuously buying gold when the price of gold is increasing? The main reason behind this is seen as diversifying China’s foreign exchange reserves and long-term economic strategy. Many central banks around the world are also increasing their gold reserves amid geopolitical and economic uncertainty. The most surprising thing is that in August, gold prices rose by about 10 percent. Despite this, China has increased its gold purchases. One thing is clear from this: it would not be right to see China linking this purchase only with short-term profit expectations. Long-term reserve strategy may be a big part of this.
Not only China, other countries are also buying
Central banks around the world are also increasing their gold reserves. According to July data from the World Gold Council, central banks bought a total of 23 tons of gold. China was ahead with about 20 tons. The estimated value of China’s huge gold reserves is about 350.08 billion US dollars. Poland also bought 8 tons of gold. In other words, they are competing to increase their gold reserves among central banks around the world. China’s gold reserves reached 76.73 million ounces at the end of August. On the other hand, China’s total foreign exchange reserves at the end of August were about $3.438 trillion.
What is the main reason for relying more on gold?
Reducing dependence on the dollar: China’s main goal is to reduce the influence of the US dollar and strengthen its currency (yuan) internationally.
Geopolitical crisis: Due to various wars and political tensions going on in the world, China considers gold as the safest investment (Safe Haven).
Protection from inflation and economic slowdown: Gold is a good way to protect your wealth due to rising inflation in the global market and the volatility of the bond market
General public investment: Not only the government, but also ordinary Chinese citizens are investing more in gold bars and coins than keeping money in the bank. This means that the importance of gold in China’s reserve portfolio is gradually increasing.
What will be the impact on India?
China’s continuous gold buying is also important for India. Because India is one of the largest gold markets in the world. If the demand from central banks increases, it can affect the demand and price of gold in the global market. So China’s gold buying in these 22 months is not only a big signal for China’s reserve store, but also for the global gold market. The market is now watching whether China will continue this gold buying in the coming months or not. If the demand from central banks continues, its impact on the gold market could continue.
