Why is China importing a record amount of gold?

Wed Oct 14 2026

Accumulating gold for 23 consecutive months

The surge in gold purchases reflects Beijing's efforts to reduce its dependence on the US dollar and U.S. government bonds. In the domestic market, the prolonged weakness in real estate and stocks, along with low deposit yields, leaves Chinese households with few safe investment options. Analysts believe that Chinese demand for gold is likely to remain high amid ongoing economic challenges.

According to data from China's State Administration of Foreign Exchange, the PBOC purchased approximately 23 tonnes of gold in September, the highest monthly amount in nearly three years. This move extends the Chinese central bank's longest continuous gold buying streak since at least 2015.

Not only the PBOC, but also Chinese households and businesses are increasing their gold holdings as a safe-haven asset. Customs data shows that in the first eight months of 2026, China spent a record $158.8 billion to import more than 1,000 tons of gold. This figure far exceeds the total import value of $96.5 billion and the volume of 886 tons of gold imported in all of 2025.

According to Aakash Doshi, Director of Gold Strategy at State Street Investment Management, gold imports to meet China's consumer demand reached a record high in the first eight months of the year. The widening domestic gold price differential also indicates strengthening seasonal demand during the winter months.

The wave of hoarding is occurring amidst a downward correction in global gold prices. The price of the precious metal lost more than 8% in September, falling to around $4,176 per ounce, after peaking above $5,500 per ounce in January. However, Mr. Doshi predicts that gold prices could rise to around $4,750–$5,500 per ounce by the end of the first quarter of 2027, thanks to continued high demand.

Geopolitical factor: Reducing dependence on the US dollar

According to Carsten Menke, an analyst at Julius Baer Group, one of the main drivers behind the PBOC's gold purchases is geopolitical. China wants to reduce its dependence on the US dollar and US government bonds in its foreign exchange reserves.

The freezing of assets by Western governments at the Russian central bank following the outbreak of the Ukraine conflict in 2022 demonstrates that reserves held abroad can be limited during periods of geopolitical tension.

Meanwhile, gold held in a country's reserves is less susceptible to sanctions or asset freezes from external sources.

Alongside increasing its gold reserves, China is reducing its holdings of US government bonds. According to US Treasury data, the value of US government bonds in China's portfolio fell to $618 billion in July, the lowest level in 18 years. This trend reflects Beijing's diversification of foreign exchange reserves and its reduced dependence on a single asset class or currency.

Mr. Menke also suggested that the plan to build a larger and more sophisticated domestic gold market is driving China to replenish its precious metal reserves. According to his estimates, by the end of August, the PBOC may have purchased around 190 tons of gold in 2026, of which about 110 tons were not officially disclosed.

Feeling insecure: People seek alternative shelter channels

Demand for gold in China is also driven by people's desire for safe-haven assets amid uncertain economic prospects. Real estate used to be the primary asset accumulation channel for Chinese households, but this market has been in a prolonged downturn for many years. The CSI 300 stock index has lost about 8% since the beginning of the year, in contrast to the 13% increase of the S&P 500 index in the US.

Bank deposit and bond yields in China also fell amid weak borrowing demand. The yield on one-year Chinese government bonds dropped to around 1.2%, while the yield on a comparable instrument in the US was around 4.46%.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that the opportunity cost of holding gold in China is significantly lower than in many Western markets.

Gold does not generate interest like deposits or bonds. However, when domestic interest rates are low, the income that investors have to forgo to hold gold also decreases. This increases the attractiveness of gold bars, gold coins, and gold jewelry to Chinese people.

What impact will this have on world gold prices?

Strong demand from China is helping gold prices withstand factors that could otherwise have triggered a deeper decline. High US bond yields typically reduce the attractiveness of gold, as the precious metal does not generate interest. Normally, when interest rates and bond yields rise, investors tend to shift capital to assets that generate a stable income stream.

However, Ewa Manthey, a commodity strategist at ING Bank, argues that China's gold purchases have become a source of structural support for the price of the precious metal.

Central banks typically buy gold for long-term holdings and are less sensitive to price fluctuations than individual investors. Therefore, demand from these institutions can create a relatively solid "floor" for the market.

Mr. Menke also noted that gold prices remain higher than summer levels, despite significantly increased expectations for interest rates and bond yields. The Federal Reserve has signaled it may continue raising interest rates in 2026, but demand for gold from China continues to help limit downward pressure on prices.

According to the World Gold Council, China is the world's fifth-largest holder of gold reserves, with 2,387 tonnes as of August. However, this figure is still less than one-third of the gold held by the United States.

Factors that can cause demand to cool down

The outlook for gold demand in China remains dependent on developments in the domestic economy and financial markets. If confidence in the real estate and stock markets recovers, some capital may move away from gold and back into assets with the potential to generate higher returns. A weaker yuan could also make gold more expensive for domestic buyers.

Furthermore, if deposit interest rates rise, Chinese citizens may reduce their need to hold non-yielding assets like gold. According to Hansen, a more significant shift would only occur if central banks reduce their need to diversify reserves and geopolitical tensions around the world ease considerably. However, the expert believes that neither of these possibilities is imminent.

Against this backdrop, the PBOC's buying activity, along with safe-haven demand from Chinese households and businesses, could continue to be one of the most important factors shaping the global gold market in the coming months.

Source: https://www.vietnam.vn/ā