China is intensifying its efforts to de-dollarize, stepping up gold purchases while simultaneously reducing its exposure to US Treasuries. The Chinese central bank has been buying gold for 23 consecutive months, while imports of the precious metal recorded a historical record in the first eight months of 2026. At the same time, Chinese holdings in US bonds dropped in July to their lowest level in 18 years, as Beijing seeks to diversify its foreign exchange reserves. This strategy acquires particular importance in an environment of geopolitical tensions and economic uncertainty, while heightened Chinese demand emerges as a significant supporting factor for international gold prices.
An additional 23 tons of gold
The People's Bank of China (PBOC) added approximately 23 tons of gold in September, recording its largest monthly purchase in nearly three years, according to data from the State Administration of Foreign Exchange (SAFE). In doing so, the central bank extended its longest buying streak since at least 2015. Chinese households and businesses are turning to gold as a safe haven. The country spent a record $158.8 billion to import more than 1,000 tons of gold during the first eight months of 2026, according to customs data.
This value exceeds the $96.5 billion and 886 tons imported in all of 2025. Gold imports for consumer use in China reached an all-time high during the first eight months of the year, according to Aakash Doshi of State Street Investment Management. Rising premiums—the additional amounts paid for gold in the domestic Chinese market relative to international benchmark prices—indicate "stronger seasonal demand ahead of winter," Doshi stated. The accumulation of the precious metal is taking place during a period in which gold prices have pulled back. In September they recorded a decline of over 8%, trading around $4,176 per ounce, following the historical high of over $5,500 reached in January. Doshi projects that gold prices will move between $4,750 and $5,500 per ounce through the end of the first quarter of 2027, with demand dynamics acting supportively.
Why China is buying gold
The primary motivation of the People's Bank of China is political, according to Carsten Menke of Julius Baer. As he points out, a decisive role is played by "the weaponization of the US dollar and the consequent desire to reduce reliance on US Treasuries as a reserve asset." Western governments froze the assets of the Russian central bank following Russia's invasion of Ukraine in 2022. This development highlighted the risk of restricted access to foreign-held reserves during periods of geopolitical tension, unlike gold stored in a country's own vaults that remains shielded from such measures. China has reduced its holdings in US Treasuries, which fell in July to an 18-year low of $618 billion, according to data from the US Department of the Treasury.
Beijing thus continues to diversify its foreign exchange reserves. Chinese demand is also bolstered by gold's reputation as a safe haven. The country's consumers, anxious over the fragile economic situation, are turning en masse to gold jewelry, bars, and coins. Domestic investors face limited alternative choices, as the real estate market—which previously served as the main store of household wealth—remains in a multi-year slump. The benchmark CSI 300 index is down roughly 8% year-to-date, in contrast to the S&P 500, which registers a 13% gain. At the same time, yields on bank deposits and bonds have declined amid sluggish demand for borrowing. The yield on the Chinese one-year government bond fell to around 1.2%, compared to approximately 4.46% in the US. "The opportunity cost of holding gold is also much lower in China compared to many Western markets," stated Ole Hansen of Saxo Bank. Contributing to this unprecedented buying momentum is Beijing's plan to create a more developed domestic gold market, which is driving authorities to replenish their reserves, according to Menke. He estimates that the central bank purchased roughly 190 tons of gold through the end of August this year, including 110 tons that had not been officially reported.
Gold as a shield
Demand from China has contributed to gold's resilience, preventing a deeper decline in its prices. Elevated US bond yields were exerting pressure on the precious metal, which yields no interest or regular return. Typically, when interest rates rise, the price of gold declines. "Purchases from China have evolved into a major structural support factor for gold prices," stated Ewa Manthey of ING Bank. As she added, central banks purchase gold with a long-term horizon and are far less sensitive to price fluctuations compared to private investors. In the same vein, Carsten Menke pointed out that gold prices have remained above summer levels despite the sharper rise in rate expectations and bond yields. The Fed has left open the possibility of one more rate hike within 2026.
China, which holds the fifth-largest gold reserves globally, held 2,387 tons in August, according to the World Gold Council. This quantity corresponds to less than one-third of the gold reserves held by the US. However, a potential resurgence of confidence in the Chinese real estate market and stock exchange could curb demand for gold. The same could occur if the yuan weakened further, making gold more expensive domestically, or if interest rates rose, making bank deposits more attractive. These are among the factors that could temper demand, according to Hansen. The most significant shift, however, would arise if central banks lost interest in diversifying their reserves and if geopolitical tensions de-escalated, he assessed, adding that "neither outcome appears particularly imminent."
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