China's central bank continues to accumulate gold, drawing market attention with more aggressive purchases even as prices plummeted.
Bloomberg reported on Monday that the People's Bank of China increased its gold reserves by approximately 160,000 ounces (about 5 tons) in March, marking 17 consecutive months of net purchases.
According to China Securities Journal and other outlets on Tuesday, China's total gold reserves stood at 74.38 million ounces as of the end of March. This represents a 160,000-ounce increase from the previous month, the largest monthly gain since March last year.
As one of the world's largest gold buyers, China's latest purchase is seen as an extension of its long-term foreign exchange reserve strategy.
The timing of this acquisition is particularly noteworthy as it occurred during a significant price decline. Continued dollar strength due to Middle East conflicts and persistent inflation pressures weakened expectations for U.S. Federal Reserve rate cuts. As a result, gold prices fell approximately 12% in March, recording the largest monthly drop since 2008. Some investors selling gold to cover losses in other assets also contributed to the price decline.
Despite the volatility in gold prices, China did not stop buying. Bloomberg noted that "China's continued purchases while some central banks are selling could help support investor confidence in gold." Over the past year, global central banks have been increasing their gold allocations to hedge against dollar asset volatility and geopolitical risks.
Experts view this move not as a simple investment decision but as strategic asset restructuring. Fang Meng, a researcher at China's National Institution for Finance and Development, explained that "the PBOC's continued gold purchases demonstrate a clear direction toward increasing the share of non-credit assets in foreign exchange reserves." He added this reflects "a strategy emphasizing asset safety and long-term stability as the global monetary system restructures." Fang noted that "China is employing a small-scale, phased purchasing approach to minimize market impact and spread acquisition costs."
Huatai Securities stated that "in the medium to long term, global de-dollarization trends and concerns about U.S. fiscal sustainability will support gold's value," adding that "gold will function beyond a simple investment asset as a core tool for hedging credit risk and asset reallocation."
Meanwhile, Russia, facing fiscal pressure from the prolonged Ukraine war, has been selling gold to secure liquidity. The World Gold Council reported on March 24 that Russia sold approximately 15 tons of gold in the first two months of this year, the largest volume since 2002.
With Western nations freezing approximately $300 billion in Russian overseas assets, gold has effectively become Russia's last means of generating cash. Russia has shifted from internal transactions to selling gold directly on the open market, reducing its reserves to 74.3 million ounces, the lowest level since March 2022.