China lifted its foreign exchange reserves by $3.6 billion in May, pushing the total up to $3.285 trillion, based on new figures released by Beijing’s foreign exchange regulator on Saturday.
That’s just a 0.11% increase from April’s $3.282 trillion and well below what was expected by analysts, who had forecast $3.292 trillion.
This gain came even though the yuan lost 1.05% against the US dollar, and the dollar itself slipped 0.23% compared to other major currencies. The regulator said the rise came from a mix of exchange rate moves and price changes in overseas-held assets, according to data from Reuters.
Even though the yuan got weaker, the value of China’s foreign holdings still moved up. The number was small, but the country remains in control of the world’s largest forex reserve pile. China’s central bank also wasn’t just sitting around watching the charts.
China continues gold buying despite price swings
While most of the world stayed frozen in wait-and-see mode, China kept stacking gold like a country preparing for something big. In May, the People’s Bank of China (PBOC) added 60,000 troy ounces to its already massive reserve, bringing the total to 73.83 million fine troy ounces. This is the seventh month in a row of non-stop gold buying.
Gold prices went wild earlier this year, climbing to record highs in April. Central banks played a huge part in that spike, as they pumped billions into the metal to move away from over-reliance on the US dollar.
The PBOC’s continuous buying has been a key force keeping gold prices high even after the April rally cooled off. At the same time, investors have also been pouring into gold as global tensions and fears about US assets grow louder.
Goldman Sachs analysts estimate that central banks are currently swallowing up about 80 metric tons of gold per month. That’s $8.5 billion monthly, based on where prices are sitting right now.
A lot of these transactions don’t make the headlines because they’re done quietly. Still, trade data suggests that China is behind a big chunk of that demand, along with unnamed players moving shipments through Switzerland.
All together, central banks and sovereign wealth funds have been absorbing about 1,000 tons of gold annually. That’s 25% of yearly global production, according to the World Gold Council.
An HSBC survey in January of 72 central banks showed that over a third of them plan to buy even more gold in 2025. Not a single one said they’re selling. Timur Suleimenov, the head of the National Bank of Kazakhstan, said they were selling last year but have now flipped.
Sanctions, distrust in dollar fuel move into gold
This surge in buying didn’t just happen out of nowhere. A lot of it started after the US and allies froze Russia’s foreign reserves in 2022 following its full invasion of Ukraine. That single move shook a lot of governments, who suddenly realized their dollars could be taken away overnight. Many are now doubling down on reserves they can keep close and untouched.
“Gold is the safest reserve asset,” said Adam Glapinski, the governor of the National Bank of Poland. “It is free from direct links to the economic policy of any country, resistant to crises and retains its real value in the long term.”
Adam’s not alone. Central banks that once dumped gold in the 1990s—like the ones in Canada, Switzerland, and the UK—are now watching other countries scoop up what they let go.
After the 2008 financial crash, central banks started slowly increasing their gold stockpiles again. That pace exploded after Russia’s sanctions. But most of the action is now silent. Many buyers avoid publicly reporting how much gold they’re buying. Even when they do, it barely reflects reality. In 2024, only about a third of actual central bank gold purchases were publicly confirmed.
Most banks still notify the International Monetary Fund when they adjust their gold holdings, but plenty don’t. Sovereign wealth funds also tend to keep their cards close to their chest. These days, nobody wants their reserves held hostage.
Russia’s frozen money—mainly stuck in Euroclear, a clearing house based in Belgium—is still sitting there while some Western leaders now want to grab it to help Ukraine. That’s another reason gold stored inside a country’s own borders has become more attractive.
Massimiliano Castelli, managing director at UBS Asset Management, said the dollar’s role in global reserves is likely to keep shrinking faster than before. That doesn’t mean countries can easily ditch the dollar—there isn’t enough high-quality debt in other currencies to absorb the change. But that’s where gold comes in again. It’s not just about risk. It’s about control.
JPMorgan Chase analysts said that if just 0.5% of global US-dollar reserves are redirected into gold in the next few years, the price could shoot up to $6,000 per ounce by 2029.
That’s more than double today’s levels. Hambro, from BlackRock, said: “The gold market is a big market, but the dollar market is enormous. A small amount moving from the dollar market to the gold has a big impact.”
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