China’s gold reserves have grown for 18
straight months, country’s central bank says
·
World
Gold Council said China is expected to continue increasing its gold reserves as
emerging-market central banks diversify reserve assets away from excessive
reliance on the U.S. dollar.
·
Joe
Cavatoni, senior market strategist at the World Gold Council, said central
banks — including China’s — are likely to keep adding gold holdings, although
at varying speeds.
·
According
to the People's Bank of China:
o China’s gold reserves reached 74.64
million troy ounces at the end of April 2026.
o This marked the 18th consecutive month of
reserve increases.
o Holdings rose by 260,000 troy ounces from
March.
·
By
comparison, the United States holds 261.48 million troy ounces of gold
reserves, the world’s largest stockpile.
·
The
World Gold Council said the trend should not necessarily be viewed as
“de-dollarisation.”
·
Instead,
central banks are seeking diversification because few alternative reserve
assets are considered sufficiently stable and liquid.
·
Gold
demand is being supported by:
o rising debt levels in developed economies,
o concerns over weakening purchasing power
of fiat currencies,
o geopolitical uncertainty,
o and inflation risks.
·
Turkey
was cited as an example of a country using gold reserves to help manage its
current-account deficit and support its currency.
·
Chinese
retail and institutional investors significantly boosted global gold ETF
inflows in 2026.
·
China
attracted approximately:
o US$9 billion in gold ETF inflows during
the first four months of the year.
·
This
exceeded:
o India: US$3.6 billion,
o Switzerland: US$1.9 billion,
o United Kingdom: US$1.9 billion.
·
The
United States recorded net outflows of about US$1.3 billion from gold ETFs.
·
Analysts
noted that younger Chinese investors are increasingly shifting from traditional
jewellery purchases toward:
o gold ETFs,
o gold bars,
o and coins.
·
Weakness
in other investment sectors such as real estate has also increased gold’s
attractiveness as a diversification asset.
·
Hong
Kong Exchanges and Clearing announced:
o a one-year waiver of trading fees on gold
futures contracts,
o and new incentive programmes to improve
liquidity in Hong Kong’s gold market.
·
Gold
prices have risen around 3% so far in 2026 and are trading near US$4,370 per
troy ounce.
·
Higher
U.S. interest rates and a stronger dollar have reduced Western investor
appetite for gold because cash and bonds offer better returns.
·
BlackRock
said tensions in the Middle East have shifted market expectations toward
possible future interest-rate increases by the U.S. Federal Reserve and the
Bank of England.
·
Analysts
said future gold price growth may depend on easing inflation pressures and
eventual interest-rate cuts by the Federal Reserve.
China
is expected to keep adding to its gold reserves as central banks in emerging markets
turn to the precious metal to diversify their reserve assets, the World Gold Council
said.
“We
expect central banks, including China’s, to continue increasing gold holdings, though
the pace may vary,” Joe Cavatoni, the council’s senior market strategist and head
of public policy, said this week.
China’s
gold reserves stood at 74.64 million troy ounces (2,322kg) at the end of last month,
up 260,000 troy ounces from March, according to the People’s Bank of China, marking
the 18th straight month of increases.
By
comparison, the US holds 261.48 million troy ounces in its reserves, the world’s
largest, which have remained unchanged in recent quarters, according to figures
from the US Treasury and US Federal Reserve.
The
trend should not be framed as de-dollarisation, Cavatoni
said, adding that “it’s an opportunity for someone to diversify away from the dollar
as a reserve asset because there are not many options that are very viable.”
Gold
demand was being supported by structural concerns over rising debt levels in developed
economies and the continued erosion of fiat currencies’ purchasing power, Cavatoni said on Wednesday. Turkey offered one example, he added,
as the country was tapping its gold reserves to help manage its current-account
deficit and support the value of its currency.
Chinese
retail and institutional investors have also driven strong global demand for gold
exchange-traded funds (ETFs) this year.
China
led global gold ETF inflows in the first four months of the year, attracting about
US$9 billion, more than twice the US$3.6 billion recorded by second-placed India.
Switzerland and the United Kingdom followed, each drawing inflows of US$1.9 billion,
while the United States recorded outflows of US$1.3 billion.
Cavatoni attributed the trend to gold’s role “as
a very strong diversifier, particularly in markets where maybe real estate or other
real assets haven’t performed as well”, as well as a shift by younger Chinese investors
away from jewellery and towards gold ETFs, bars and coins. Investors in mainland
China and Hong Kong had become a substantial force in the gold market, he said,
adding that the council was monitoring the trend closely.
Riding
a wave of high demand for gold investment products and hoping to revitalise gold
trading in the city, the Hong Kong stock exchange announced on Thursday that it
would waive trading fees on gold futures contracts for a year and introduce incentive
programmes to boost liquidity.
Chinese
demand remains resilient despite a stronger US dollar and a hawkish US Federal Reserve
that is expected to hold interest rates steady. Western investors, however, have
pulled back from gold as higher rates make cash and bonds more attractive alternatives.
Gold
prices have risen about 3 per cent so far this year and now stand at about US$4,370
a troy ounce, which Cavatoni described as “holding firm”.
In
a note issued on Wednesday, asset manager BlackRock said the Middle East conflict
had “triggered a broader reset in interest rate expectations”, as the market shifted
from pricing in rate cuts to pricing in US Federal Reserve and Bank of England rate
increases – creating a headwind that was weighing on gold sentiment.
Cavatoni said “we need to see some pressure release
on the inflationary pressure for the Fed to go back and see growth potential [in
gold prices]” because [new Fed chairman] Kevin Warsh had said he wanted to cut rates
to help the market support growth opportunities in technology, artificial intelligence
and infrastructure.