China's central bank expanded its gold reserves for the 23rd month in a row in September, adding to a sustained diversification drive while the country's foreign exchange reserves fell more than expected. The People's Bank of China reported gold holdings of 77.47 million fine troy ounces at the end of September, up from 76.73 million ounces a month earlier. That monthly increase of roughly 740,000 ounces continues a pattern that began in late 2024.
The same period saw China's forex reserves drop to $3.400 trillion, a larger decline than analysts had predicted. The fall was attributed to a stronger US dollar, which typically reduces the dollar value of reserves held in other currencies. Interestingly, the yuan itself rose 0.22% against the dollar during September, so the reserve decline was not driven by yuan weakness.
Why central banks buy gold
Gold remains a popular reserve asset for central banks because it carries no credit risk and is not tied to any single government's liabilities. For China, which holds the world's largest official gold reserves after the United States, the steady accumulation is part of a broader strategy to reduce reliance on dollar-denominated assets. The move also aligns with a global trend: central banks worldwide have been net buyers of gold for over a decade, with the pace picking up since 2022.
Each fine troy ounce equals 31.1035 grams, and gold is quoted in US dollars per ounce in international markets. By adding gold month after month, China signals its intent to hold a more diversified reserve portfolio, even as short-term currency movements pressure its overall reserve valuation.
What the data tells us
September's figures are notable for two reasons. First, the continuation of the buying streak shows policy consistency, not a one-off adjustment. Second, the simultaneous decline in forex reserves highlights how valuation effects from currency moves can obscure the underlying picture. A stronger dollar makes non-dollar assets worth less in dollar terms, which can push total reserves down even when the central bank is not selling anything.
For gold investors, central bank demand is a key support factor. China's repeated purchases add to a narrative of official sector interest that many market watchers track closely. However, the absolute size of China's gold holdings remains modest relative to its total reserves, leaving room for further accumulation if the central bank chooses to continue.
Key takeaways
- China's gold reserves rose to 77.47 million fine troy ounces in September, from 76.73 million in August.
- This marks the 23rd consecutive monthly increase in official gold holdings.
- Forex reserves fell to $3.400 trillion, worse than expected, due to a stronger US dollar.
- The yuan appreciated 0.22% against the dollar during the month.
Common questions
Why does the central bank keep buying gold?
Gold is a strategic reserve asset that helps diversify away from any single currency. For China, it reduces reliance on the dollar and provides a safeguard against geopolitical and financial risks.
Does the forex reserve drop indicate a problem?
Not necessarily. The decline is largely a valuation effect from the stronger dollar, meaning the value of non-dollar assets fell in dollar terms. It does not necessarily imply capital outflows.
How much gold does China hold?
At the end of September, China held 77.47 million fine troy ounces. This is roughly 2,410 tonnes, making it the world's sixth-largest official holder, though far behind the US.
Central bank buying remains an important factor for anyone tracking the live gold price. While no one can predict future purchases, the sustained trend shows official interest in gold as a long-term reserve asset.
Overall, September's data confirms that China is sticking to its gold accumulation path, even as external forces like the dollar create headwinds for its broader reserve position. The combination of rising gold and falling forex reserves is a reminder that valuation changes and active policy choices can move in opposite directions.