Key facts
- China's central bank added 640,000 ounces of gold in July, marking its 21st consecutive month of expansion.
- Total official gold reserves reached 76.08 million ounces by the end of July.
- China's foreign exchange reserves rose by $2.5 billion to $3.4188 trillion in July.
- Central banks globally are increasing gold holdings to strengthen reserves amid financial volatility.
- Geopolitical risks and reserve diversification are primary objectives for central bank gold purchases.
China's central bank, the People's Bank of China (PBOC), continued its gold accumulation in July, marking the 21st consecutive month of expansion in its bullion holdings. The PBOC added 640,000 ounces of gold last month, bringing its total official reserves to 76.08 million ounces by the end of July. This purchase represents the largest single-month acquisition since 2023.
The extended buying streak aligns with a broader global trend where central banks are increasing their gold reserves. According to Ray Jia, head of research for Asia-Pacific excluding India at the World Gold Council, central bank gold purchases saw a significant rebound in the second quarter, with purchases rising over 60 percent year-on-year. He noted that hedging against geopolitical risks and pursuing reserve diversification are the main objectives for these purchases, with price factors being secondary.
In parallel, China's foreign exchange reserves saw a modest increase in July. The State Administration of Foreign Exchange reported that reserves rose by $2.5 billion to $3.4188 trillion. This growth was attributed to the decline of the US dollar index and mixed performance in major global financial assets, which influenced currency conversions and asset prices. The administration also highlighted China's economic resilience as a factor supporting the stability of its foreign exchange reserves.