China's Latest Gold Move Stands Out as Prices Fall Moz Farooque ACCA Wed, October 7, 2026 at 2:45 PM EDT GC=F -1.19% DX-Y.NYB +0.39% This article first appeared on GuruFocus.
China's central bank stepped up gold purchases in September as prices fell sharply, adding 740,000 ounces in its biggest monthly increase in roughly three years. The move reinforces the idea that official-sector demand remains an important support for gold even as a stronger U.S. dollar and elevated Treasury yields pressure the metal in the short term.
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The People's Bank of China increased its gold holdings to 77.47 million ounces from 76.73 million in August, extending its buying streak to 23 consecutive months. The September addition was roughly 23 tonnes and exceeded the increases recorded in both July and August.
China has now accumulated roughly 103 tonnes of gold in 2026, continuing a broader reserve-diversification push.
The buying came during a difficult month for bullion. Gold fell more than 6% in September, ending the month near $4,157 an ounce. The decline was driven largely by rising Treasury yields and a firmer dollar, both of which make non-yielding gold less attractive.
Despite adding physical gold, the value of China's reserves fell to about $323.5 billion from roughly $350.1 billion in August because of the lower market price. China's overall foreign-exchange reserves also slipped to about $3.4 trillion.
Gold remained under pressure Wednesday, falling toward $4,100 an ounce as the dollar strengthened and Treasury yields pushed to multi-decade highs.
The key question is whether central-bank buying can offset increasingly hostile macro conditions.
Investors should watch Chinese monthly reserve additions, ETF flows, the U.S. dollar and long-term Treasury yields. Continued aggressive purchases from China would strengthen the structural demand case, particularly if gold tests the psychologically important $4,000 level.
The main risk is that higher-for-longer interest rates keep real yields elevated and overwhelm official-sector buying. A weaker dollar or falling yields would make China's accumulation much more supportive of a renewed gold rally.
