China’s central bank has continued its purchasing spree of gold, increasing its reserves to 73.61 million fine troy ounces by the end of February, up from 73.45 million at the end of January. This marks the fourth consecutive month that the People’s Bank of China (PBOC) has raised its gold holdings, signaling the country’s commitment to strengthening its reserves.
At the end of February, China’s gold reserves were valued at $208.64 billion, up from $206.53 billion at the close of January, according to official data released by the central bank on Friday.
China’s Gold Buying Strategy: Strengthening the Reserve Portfolio
Frank Watson, a market analyst at Kinesis Money, noted that the PBOC’s ongoing gold purchases play a significant role in supporting the gold market. “The PBOC’s purchases are an important factor underpinning gold, so a continuation of its buying in February could help to build further strength behind the gold price,” Watson said.
This ongoing acquisition of gold is part of China’s broader strategy to diversify its reserves, which is a crucial step in the face of growing global economic challenges.
Global Factors Driving Gold’s Price Surge
Gold’s value has been impacted by several global factors, particularly rising U.S. import tariffs, which have raised concerns about global economic growth, inflation, and geopolitical stability. On February 24, these pressures helped push gold to a record high, marking a 27% increase in its price in 2024 — the highest jump in 14 years.
As the U.S. continues to impose additional tariffs on Chinese goods, Beijing has responded with retaliatory measures. On Tuesday, the U.S. added an extra 20 percentage points to existing tariffs on Chinese products, further escalating tensions between the two economic giants.
In response, China has implemented more fiscal stimulus measures. On Wednesday, it promised enhanced efforts to support domestic consumption and mitigate the effects of the escalating trade war. China’s state planner also stated that the country would accelerate the stockpiling of strategic commodities, including gold.
Central Bank Gold Purchases: A Global Trend
China is not alone in its gold-buying endeavors. According to the World Gold Council, central banks around the world have continued to add to their gold reserves, purchasing over 1,000 metric tons of gold for the third consecutive year in 2024. This trend is expected to persist into 2025, with central banks anticipated to remain active buyers of the precious metal.
Unlike individual investors, central banks are less sensitive to gold’s price fluctuations. They typically purchase gold as part of a long-term strategy to restructure their reserve holdings. This approach has made central banks a significant source of demand for gold.
Impact of Central Bank Purchases on Gold Prices
Frank Watson added, “Buying by the PBOC and other central banks has been a key factor for gold’s very strong price performance over the last two years. However, other factors such as inflation, interest rates, geopolitical events, and investor interest in safe-haven assets will continue to shape the gold price.”
China’s gold-buying activities have been especially notable. After taking a six-month break in 2024 following an 18-month purchasing spree, the PBOC resumed its buying in November. This return to the market has likely contributed to the upward pressure on gold prices.
What’s Ahead for Gold?
The sustained buying from China and other central banks will likely keep the demand for gold high in the coming months. As geopolitical tensions rise and inflation concerns persist, gold’s role as a safe-haven asset may continue to strengthen.
China’s gold purchases, combined with global economic uncertainty, are likely to influence the precious metal’s price in the near future. Analysts remain watchful of these developments, understanding the impact central bank strategies have on the broader market.
In conclusion, China’s central bank has once again increased its gold reserves, marking the fourth consecutive month of purchases. The continued growth in China’s gold holdings highlights the country’s broader strategy to diversify its reserves amidst global economic uncertainties. As central banks around the world maintain their buying trends, gold remains a strong asset, with its price likely to continue its upward trajectory throughout 2025.
For more updates on global financial trends and developments, visit inews.
