China Adds Gold for 18th Consecutive Month

The People's Bank of China (PBOC) increased its gold reserves by 12 tonnes in March, marking the 18th consecutive month of purchases and bringing total reported holdings to 2,262 tonnes.

The De-Dollarization Strategy

China's gold accumulation is part of a broader strategy to reduce dependence on the US dollar:

• Treasury Reduction: China has reduced US Treasury holdings from $1.1 trillion in 2021 to below $800 billion
• Gold Share Rising: Gold now represents approximately 4.3% of China's total reserves, up from 3.2% two years ago
• BRICS Coordination: Fellow BRICS members India, Russia, and Turkey are also aggressive gold buyers

Scale of Purchases

The PBOC has added over 300 tonnes to its reserves since late 2022. However, many analysts believe actual purchases are significantly higher, as China may be acquiring gold through non-reported channels such as the State Administration of Foreign Exchange (SAFE).

Market Impact

Chinese demand has been a key factor supporting gold prices above $2,000:

• Physical premium: Shanghai Gold Exchange premiums have averaged $30-50 per ounce above London spot
• Consumer demand: Chinese retail gold purchases rose 28% year-over-year in Q1
• Central bank demand: PBOC purchases account for roughly 15% of global mine supply

Geopolitical Implications

The sustained gold accumulation reflects growing concerns about potential US financial sanctions and the weaponization of the dollar-based payment system. Analysts note that gold provides a sanctions-proof reserve asset that cannot be frozen or seized.