New Delhi, Oct 19 (IANS) China has stepped up purchases of gold as a safe haven asset amid rising geopolitical tensions. The People’s Bank of China (PBOC) reportedly added 23 tonnes of gold in September 2026, its largest monthly purchase in nearly three years, extending its buying streak to 23 consecutive months. China’s reported holdings of gold have now risen to approximately 2,410 tonnes, according to an article in Nile Post.
The article highlights that Beijing has taken a cue from the freezing of Russian foreign exchange reserves by Western governments, following Moscow’s invasion of Ukraine in 2022. The seizure showed that dollar and euro-denominated assets held abroad can become vulnerable to sanctions. However, gold stored domestically carries no foreign issuer’s liability and is less directly exposed to such restrictions.
At the same time, this does not mean China is preparing to abandon the dollar. Rather, Beijing appears intent on reducing its dependence on a financial system in which Washington and its allies retain considerable influence, the article observes.
It points out that the trend extends beyond China. The World Gold Council (WGC) data showed net central bank purchases of approximately 39 tonnes in August, following 23 tonnes in July. Reserve managers increasingly view bullion as a source of diversification amid expectations of a more multipolar monetary system.
The article further states that China’s domestic gold demand adds another dimension. Concerns over the property market and volatility in financial assets have encouraged households and investors to seek alternative stores of wealth. Beijing’s efforts to strengthen its gold-trading infrastructure, including through Hong Kong, also support its ambition to expand the country’s role in international bullion markets.
However, the article also underlines that gold has limitations as a reserve asset. It generates no interest, can suffer sharp price corrections and cannot match the dollar’s liquidity or the depth of US Treasury markets. A stronger dollar or rising real interest rates can weaken bullion prices, making excessive reliance on gold risky.
–IANS
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