Why China Is Turning to Gold While Others Also Accumulate

China’s state‑run bank has bought about 23 tonnes of gold in September, continuing a 23‑month streak that has brought the country’s official gold hoard to roughly 2,410 tonnes. The persistence of these purchases reflects a broader recalibration of reserve policy amid shifting global economics.

The impetus traces back to the post‑2022 environment when Western sanctions immobilised Russian foreign‑exchange reserves. Beijing concluded that assets denominated in foreign currencies could be jeopardised, whereas physical gold stored within its borders remains immune to external legal claims.

The intention is not to discard the dollar entirely but to temper reliance on a monetary structure dominated by Washington and its allies.

China’s actions mirror a worldwide trend. According to the World Gold Council, central banks collectively bought a net 23 tonnes in July and close to 39 tonnes in August, demonstrating a collective push for a more balanced, diversified reserve composition.

Nevertheless, gold is not a flawless reserve asset. It does not produce interest, its market price can be volatile, and it cannot replicate the liquidity or depth of US Treasury securities. A stronger dollar or higher real interest rates could suppress gold prices, making excessive exposure to the metal a potentially hazardous strategy.