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The People’s Bank of China (PBOC) significantly increased its gold reserves in August, adding 650,000 ounces in its largest monthly purchase since 2023, according to central bank data released Monday.
The latest acquisition extends China’s gold-buying streak to 22 consecutive months, reinforcing the PBOC’s position as one of the world’s biggest official-sector buyers of the precious metal. China’s sustained accumulation has remained an important source of demand in the global gold market.
The purchase came during a strong month for bullion. Gold prices climbed nearly 10% in August after facing pressure earlier in the year, as investors renewed their focus on assets that could provide protection against currency depreciation and inflation.
Concerns surrounding the US dollar and fiscal outlook contributed to the shift in market sentiment. The US Treasury’s plans to expand government debt buybacks raised fresh questions about inflation risks and the potential for longer-term dollar weakness. Against this backdrop, investors increasingly sought alternative stores of value, with gold emerging as a key beneficiary.
China’s continued gold purchases also fit into a broader trend of sovereign investors increasing exposure to the precious metal. Persistent central bank demand has helped strengthen the long-term outlook for gold, particularly as governments seek greater diversification of their foreign exchange reserves.
The PBOC’s latest 650,000-ounce addition could further support expectations that official-sector demand will remain an important driver of gold prices. Continued purchases by China and other central banks may provide a structural source of demand even as financial market conditions fluctuate.
However, gold still faces near-term headwinds. Elevated government bond yields increase the opportunity cost of holding non-interest-bearing assets such as bullion, potentially limiting further gains.
For now, China’s record-sized August purchase highlights the PBOC’s continued appetite for gold as prices rally and concerns over inflation, government debt and US dollar weakness keep demand for alternative stores of value elevated.
