China’s Gold Rush Accelerates, Fueling Price Surge
China’s central bank made its largest monthly gold purchase in nearly three years in July, continuing a significant accumulation streak that mirrors a broader trend among global central banks to re-engage with the precious metal. This surge in demand is a key factor behind gold’s recent price resurgence, which saw the asset gain 8% over the past week.
Record Purchases and Growing Reserves
Data from The Kobeissi Letter reveals that the People’s Bank of China (PBOC) acquired approximately 640,000 troy ounces, or about 20 tons, of gold in July alone. This marks the largest single-month purchase since October 2023. The PBOC’s buying spree now extends to an impressive 21 consecutive months. At the end of July, China’s gold reserves stood at just over 76 million ounces, up from under 75.5 million ounces in June. The current market value of this substantial gold hoard exceeds $306 billion.
Accelerating Pace of Acquisition
What is particularly noteworthy is the accelerating pace of China’s gold acquisitions. After adding 160,000 ounces in March, the country progressively increased its purchases in the subsequent months. June’s accumulation of 480,000 ounces was already the largest in almost three years, a figure that was surpassed by July’s substantial acquisition.
Strategic Relocation of Reserves
Beyond sheer volume, Beijing has also been strategically relocating a significant portion of its gold reserves from London to Hong Kong. This move aligns with Hong Kong’s ambitions to establish itself as a major hub for precious metals trading. Analysts at The Kobeissi Letter noted that “The relocation is set to continue as Hong Kong launches a new gold-clearing system aimed at making the city a bigger center for global gold trading and pricing.”
Global Central Bank Demand Peaks
The trend of central bank interest in gold is not isolated to China. Data from the World Gold Council indicates that central banks collectively purchased a record 289 tonnes of gold in the second quarter, representing a substantial 74% increase compared to the same period last year.
Contrast with Cryptocurrency Stance
In stark contrast to its robust gold accumulation, China has tightened its cryptocurrency restrictions earlier this year, reaffirming the illegality of all digital asset-related business activities. The country has also broadened its scrutiny to include stablecoins and the tokenization of real-world assets.
Gold’s Rebound and Performance Against Bitcoin
The substantial accumulation by the PBOC and other central banks has been instrumental in halting gold’s recent price decline and facilitating a significant recovery over the past week. After falling from its all-time high of $5,600 per ounce to just under $4,000 within months, the precious metal rebounded by 8% in the last week, closing at $4,342. This recovery has brought gold back to a breakeven year-to-date price. While not in positive territory for 2026, gold has demonstrated a far stronger performance than Bitcoin, which continues to struggle around $65,000, down over 25% since the beginning of the year.
