China’s gold reserves have reached a remarkable 2,410 tons as of September 2026, reflecting continuous accumulation for 23 consecutive months. The People’s Bank of China (PBoC) made a significant buy of 23 tons in September, marking the largest monthly purchase since October 2023. This steady increase signals a strong commitment to expanding the nation’s gold holdings despite fluctuating global markets.
Quarterly Purchases and Reserve Portfolio
According to the World Gold Council (WGC), China acquired a total of 63 tons of gold in the July to September quarter, making it the biggest quarterly purchase after Q3 of 2023. Gold now represents 8.5% of China’s total foreign exchange reserves. Meanwhile, September saw the country’s overall foreign reserves shrink by 2% to about $3.8 trillion, mainly due to declining valuations of assets held in foreign currencies.
Interestingly, China increased its gold stockpile even as gold prices declined during September. The London Bullion Market Association (LBMA) gold price fell 8.5% in US dollars and 5.5% in yuan on the Shanghai benchmark. This dip was attributed to higher yields on US Treasury bonds, a tight Federal Reserve policy, and a stronger dollar. Despite this, gold prices showed a slight rise over the quarter and held steady above $4,100 per ounce at the start of October.
Reducing Dollar Dependence and Strategic Goals
Experts suggest that China aims to reduce its dependence on the US dollar and strengthen the safety of its foreign reserves by boosting gold holdings. Analyst Mike Mahre from Money Metals Exchange points out that gold is not a liability of any government, unlike dollar-denominated assets that depend on the financial health of issuing countries.
This approach stems from two main concerns: the rising US debt and the potential decline in global demand for the dollar and US bonds. The US borrows heavily to fund its spending, relying on the dollar’s global currency status. If governments and investors worldwide lose interest in dollars and bonds, borrowing costs for the US could increase, putting pressure on the currency.
Building Hong Kong into a Gold Hub
China’s strategy goes beyond central bank purchases. The country is striving to establish Hong Kong as a major global center for physical gold trading and payment settlements. This includes enhancing gold storage capacity and developing yuan-based futures and trading systems.
The currency in which gold prices and payments are determined matters greatly. Shifting a significant portion of international gold trade from the dollar to the yuan could boost the Chinese currency’s role in global commerce. This would provide countries and traders with an alternative to the dollar-based financial system.
Growing Domestic Demand but Challenges Remain
Gold demand in China is not limited to government activity. In September, Chinese gold ETFs saw an 11-ton increase in holdings—the third consecutive month of growth—pushing total ETF holdings to a record 304 tons. Investor interest stems partly from the volatility of local stock markets and lower returns on government bonds, combined with confidence from the central bank’s purchases.
However, not all sectors are experiencing growth. Third-quarter wholesale gold jewelry demand dropped 21% compared to the same period last year and fell 44% below the ten-year average, indicating some weakness in consumer demand.
Experts believe that while this accumulation strategy by China accelerates debate over the future of the global financial system, the dollar’s dominance is unlikely to dissipate abruptly. The dollar remains a key component in global trade and finance, but diversifying foreign reserves into assets like gold could gradually reduce long-term dependency.
