China's Gold Buying Halt: Strategic Pause or Full Void?

China Stopped Buying Gold: Strategic Pause or Full Vault?

6 June 2025 on 10: 44

Reading time: 2 minutes

The Chinese Central Bank's Gold Rush

Between November 2022 and the first quarter of 2024, the Chinese central sofa (PBoC) unprecedented amounts of gold. In 2023 in particular, China stood out as the largest buyer: 1.037 tonnes of gold were bought by central banks worldwide couches purchased, with the PBoC alone accounting for 30%. This pace continued in the first quarter of 2024 with 290 tonnes of purchases.

Sudden Silence In May And June

Yet the PBoC’s gold holdings remained unchanged at 2024 tonnes in May and June 2.264 — the end of an XNUMX-month buying spree. This begs the question: has China reached saturation, or is this just a strategic pause?

JP Morgan: 'More Tactical Behavior Expected'

According to JP Morgan, central banks will continue to buy more gold structurally, but will adjust their timing to price fluctuations. Although the long-term view remains stable, the price now determines the pace of purchases.

Lower Demand, But New Import Quotas

Chinese banks were granted new import quotas in August, after a two-month pause due to low physical demand. The recent premium on gold fell from $18 to $5 an ounce, indicating weak domestic interest. Still, the new quota allocation points to an expected pick-up in demand later this year.

Strategy Behind the Purchase Stop

The PBoC is using gold in part to reduce its reliance on the US dollar. Geopolitical tensions and the desire to limit sanctions risks play a role in this. This also fits into the larger picture of China's involvement in BRICS+, which focuses on trading in local currencies.

Low Gold Coverage in International Comparison

Although China holds large amounts of gold, the percentage of gold in its reserves remains low compared to other major economies. This fuels expectations that the country will eventually start buying again — once the price is more favorable.

Alternatives Lack For Chinese Investors

The real estate crisis, weak stock market and capital restrictions have made safe alternatives scarce. According to experts such as Philip Klapwijk, this will continue to stimulate Chinese interest in gold as a safe haven.

Frequently Asked Questions

Why did the Chinese central bank temporarily stop buying gold?
The pause is mainly attributed to the high gold price, with China likely waiting for a more favorable moment to continue its purchases.

Is China expected to buy gold again in the near future?
Yes, experts expect demand to pick up once prices stabilize and import quotas are actively used again.

What does this mean for the global gold price?
A resumption of Chinese purchases could put renewed upward pressure on gold prices, especially given China's role as the largest buyer in the global market.

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