China Buys 23 Tonnes of Gold in Biggest Monthly Addition Since October 2023
Key Facts
The People's Bank of China added 23 tonnes of gold to its reserves in September, its largest reported monthly increase since October 2023, according to the World Gold Council. The purchases lifted total official gold holdings to 2,410 tonnes at the end of the month, as China's central bank continued to accumulate the metal. Gold accounted for 8.5% of official reserves, according to the council's China market update, which covered government purchases, investment activity and physical demand during the month and the third quarter. The State Administration of Foreign Exchange published the reserves data on 7 October 2026, after the period covered by the purchases had ended. The addition to official assets came during a month in which gold prices fell in both the dollar-denominated London market and the yuan-denominated Chinese market.
September's purchases extended the run of official gold additions to 23 consecutive months, according to the World Gold Council, as China continued to buy on a monthly basis. The central bank purchased a total of 63 tonnes in the third quarter, including the reported September addition. Cumulative official purchases from January through the end of September totalled 103 tonnes, according to the council. The largest reported monthly purchase since October 2023 thus came as part of a sustained run of reserve accumulation, and at the close of a quarter that saw continued official additions. This government buying coincided with an increase in Chinese gold fund holdings, while jewellery consumption remained weak, highlighting divergent demand trends within China's gold market.
In fund investment, Chinese gold exchange-traded fund holdings increased by 11 tonnes in September, according to the World Gold Council. The total gold held by these funds reached 304 tonnes at the end of the month, their highest month-end holdings on record. Assets under management at Chinese funds totalled 276 billion yuan, equivalent to 41 billion dollars, according to figures cited in the council's update. Their holdings rose by 27 tonnes over the third quarter, with September's increase contributing to the quarterly investment total through these instruments. Chinese holdings reached their record level as gold prices declined during the month, with funds continuing to add to their gold holdings amid falling prices.
The World Gold Council attributed demand for the funds to "growing portfolio diversification needs", linking the trend to developments in domestic equities and bonds and continued official purchases. It said falling domestic equities were among the factors prompting investors to diversify their portfolios through Chinese gold funds during the period covered by the update. It also cited declining bond yields as a factor accompanying this investment shift towards the metal, alongside the downturn in the domestic stock market. The council said central bank purchases also encouraged demand for the funds, among the factors it listed to explain increased interest in these investment instruments. Meanwhile, jewellery consumption remained weak during the third quarter as investment and official holdings expanded, according to the council's monitoring of the different sources of demand in China.
Chinese wholesale gold demand totalled 234 tonnes in the third quarter, down 21% from the same period a year earlier, as jewellery consumption remained weak, according to the council. In September, however, withdrawals from the Shanghai Gold Exchange rose to 92 tonnes, a monthly increase of 48% from the previous month. The council attributed the increase in withdrawals to seasonal restocking and lower prices, as the quarter closed with a year-on-year decline in wholesale demand. In London, the dollar-denominated gold benchmark fell 8.5% during September, according to the monthly comparison in the council's China market update. Shanghai's yuan-denominated benchmark fell 5.5% during the same month, a smaller decline than its London counterpart, while local withdrawals rose despite continued quarterly weakness in demand.
Against China's economic backdrop, the consumer price index rose 0.9% year on year in September, according to the National Bureau of Statistics, accelerating from the previous month. Annual inflation stood at 0.8% in August, according to the bureau, before rising in the month that saw official purchases and additions to fund holdings. The annual increase in consumer prices coincided with declines in the London and Shanghai gold benchmarks during September, while jewellery consumption remained weak, as observed by the World Gold Council. On the upcoming calendar, the Federal Reserve holds its next meeting on 27–28 October, according to the Federal Open Market Committee meeting calendar published by the U.S. central bank. After that, the World Gold Council has scheduled its next Gold Demand Trends report for early November, following its China market update and the end of the third quarter.