China buys gold for 23rd straight month as analysts flag dollar-risk strategy

China's central bank bought gold for a 23rd straight month in September, adding roughly 23 tonnes — its largest monthly purchase since October 2023 — as analysts say Beijing is working to reduce its reliance on US dollar assets.

The People's Bank of China's reported holdings reached about 2,410 tonnes, according to the World Gold Council. Gold accounted for 8.5 percent of China's official reserves at the end of September, up from 5.5 percent at the end of 2024. Reserves are the assets central banks keep to meet international payments and absorb financial shocks, and typically include foreign currencies, foreign government debt and gold.

Risk management, not a break with the dollar

Thu Lan Nguyen, head of commodity research at Commerzbank in Frankfurt, told Al Jazeera the purchases are "part of a broader effort to make its reserves more resilient" and should be read "primarily as risk management" given geopolitical tension and fiscal uncertainty. Gold stored inside China has a key advantage, she said: it is not a claim on another country and is therefore much less exposed to sanctions or asset freezes.

That concern was sharpened after Western governments froze roughly $300bn in Russian Central Bank overseas assets following Moscow's 2022 invasion of Ukraine, and by US debt, which passed $40 trillion for the first time earlier this year. The Congressional Budget Office projected in February that publicly held federal debt would rise from 101 percent of US economic output in 2026 to 120 percent in 2036. Much of that debt is held by China.

Nguyen cautioned against reading the buying as a sudden shift away from the dollar, saying it remains by far the dominant global reserve currency. She described the process as slow diversification rather than abandonment, noting central banks still need readily available foreign currency to settle international payments and that gold cannot replace all the functions of dollar reserves. Consequences for the US economy would stay limited unless the trend broadens and accelerates, she added.

Household buyers have different motives

Private Chinese demand has its own drivers. Purchases of gold bars and coins were 28.4 percent higher in the first half of 2026 than in the same period last year, according to the China Gold Association, with buying continuing even as prices fell about 8.5 percent over the month. The World Gold Council partly attributed the price decline to a stronger dollar and higher returns on US government debt.

For households, gold acts as a store of value when confidence in other investments weakens. The World Gold Council has pointed to weak Chinese share markets and a property sector burdened by heavy borrowing and overbuilding, which has pushed housing prices lower.

China's buying fits a wider trend among emerging market central banks. Poland bought 31 tonnes in the first quarter of 2026 and another eight tonnes in July, the World Gold Council says. India confirmed in June that its physical stock was unchanged at about 880.5 tonnes, after buying about four tonnes in 2025, down from 73 tonnes in 2024. Even with sustained purchases, China's roughly 2,300 tonnes at the end of 2025 was less than one-third of the US stockpile of about 8,133 tonnes.

Source: Al Jazeera.