China increases gold holdings for the 17th consecutive month

Ask AI · Why did China’s central bank continuously increase its gold holdings, accelerating in March, and what’s behind it?

On April 7, data from China’s central bank showed that at the end of March, China’s gold reserves were 74.38 million ounces, compared with 74.22 million ounces at the end of February—marking the 17th consecutive month of increasing its gold holdings.

Judging by the size of the increase, gold reserves increased at a faster pace in March. At the end of November and the end of December last year, gold reserves rose by 30,000 ounces month-on-month respectively; in January this year, the increase was 40,000 ounces month-on-month; and in February, it increased by 30,000 ounces.

According to statistics from the State Administration of Foreign Exchange, as of the end of March 2026, China’s foreign exchange reserves totaled $33,421 billion, down $85.7 billion from the end of February, a decline of 2.5%.

In March 2026, influenced by factors such as the global macro environment, monetary policies of major economies, and expectations, the US Dollar Index rose and the prices of major global financial assets fell. The combined effects of factors such as currency translation and changes in asset prices led to a decline in the size of foreign exchange reserves during the month. China’s economic operations remained generally stable and made progress while maintaining stability; high-quality development achieved new results, providing support for keeping the foreign exchange reserves broadly stable.

Since the situation in Iran deteriorated, gold has experienced sharp volatility. The key concern for participants in the gold market is: Is the central bank currently selling gold? Especially if the Middle East conflict is likely to become prolonged, the market worries that the central bank will have to sell gold reserves in response to surging inflation, slowing economic growth, and currency depreciation. This concern is considered the main reason for the 16% drop in gold prices in March.

On April 2, according to a report from Chasing Wind Trading Desk, UBS said clearly in its research note that the structural trend in official sector gold purchases has not changed, and that central banks will still be net buyers of gold. UBS expects that central bank gold purchases will only gradually slow down; it forecasts this year’s purchases will be between 800 and 850 tons, slightly lower than the approximately 860 tons in 2025.

During the accumulation of gold reserves over the past 15 years, it is normal for some central banks to sell gold in certain months. This could be for tactical profit-taking at highly attractive entry levels, or due to portfolio rebalancing triggered by rising gold prices.

At the same time, according to an article from Wall Street Insights, Guolian Minsheng Securities believes that the gold sales by some central banks, such as Turkey, this time are more “tactical” rather than “strategic.” The core reasons are as follows: first, institutional behavior of “following the trend.” Second, the fiscal deficit rises rapidly in the short term, leading central banks to “passively” sell gold to meet liquidity spending needs. Third, the “rise-and-fall trade-off” between central bank gold reserves and foreign exchange reserves.

Guolian Minsheng Securities also believes that the main trend of “gold prices rising long term” has not changed. The core reasons include four dimensions:

First, in March, the world was still “net buying” gold, and the selling by some central banks does not affect the main theme of “central bank gold purchases.”

Second, the trend of long-term weakening of US dollar credit has not been reversed.

Third, even if major global central banks engage in long-term “strategic” gold selling, gold prices can still rise.

Fourth, short-term “tactical” gold selling by “non-core” central banks does not affect the long-term upward trend of gold.