FX.co ★ China’s PBOC extends its gold-buying streak to 19 months

The People’s Bank of China has recorded an increase in its official gold reserves for the nineteenth straight month as of May, continuing the longest uninterrupted gold-buying campaign since at least 2015. According to data from the regulator published by Bloomberg, state reserves in China rose by an additional 320,000 troy ounces last month. Notably, Beijing’s steady accumulation of gold persists despite the fact that global prices experienced their third consecutive monthly decline in May, coming under significant pressure after reaching record historical highs in late January.

The primary factor keeping gold prices in check remains persistent inflation concerns and investor expectations that global interest rates will stay elevated longer than previously anticipated. Rising government bond yields traditionally reduce the appeal of non-yielding safe-haven assets. Nevertheless, stable demand from the official sector has emerged as a key source of market support in recent years. Massive purchases by central banks effectively counterbalance periods of temporary weakening in private investor interest and help smooth market volatility.

China’s efforts to diversify its reserves are being closely monitored by the international community, as the world’s second-largest economy seeks to reduce its reliance on traditional dollar-denominated assets. Analysts at Goldman Sachs indicate that amid rising geopolitical uncertainty, purchasing activity by global central banks may accelerate in the coming months. Current statistics underscore Beijing’s long-term commitment to expanding its gold reserves, despite the challenging macroeconomic environment.