New Cold War: Why is China buying more gold? Explained

The People's Bank of China (PBC), the country's central bank, extended its buying streak of gold reserves for the 23rd consecutive month in September 2026, marking the longest official purchase by any bank in the world. This has brought China's official gold reserves to 77.47 million ounces, up from 76.73 million ounces in August, official data showed on Wednesday (October 7).

By the end of July, China's gold reserves reached nearly 76.08 million troy ounces, valuing at around $306 billion. By the end of August, its estimated value rose to $350 billion. According to Cryptometer, the People's Bank of China (PBC) added 20 tonnes in July alone, lifting official holdings to a record 2,366 tonnes.

Why is China buying more gold?

China's central bank has maintained a sustained gold-buying streak in world history. It has been buying gold consistently for nearly two years. Multiple reasons have been cited for the bank's move, including geopolitical uncertainty, reserve diversification, evading sanctions and de-dollarisation.

De-dollarisation and reserve diversification: China holds a huge pile of foreign exchange reserves historically weighted toward US dollar assets like Treasury bonds. Gold offers a way to reduce that concentration without relying on another country's currency or financial system.

Protection against sanctions: After Russia's central bank reserves were frozen due to international pressure following Moscow's invasion of Ukraine in 2022, it has became wakeup call for countries like China. The move indicates that dollar- and euro-denominated reserves can be frozen by Western governments in a crisis, but gold held in domestic vaults cannot be sanctioned the same way, since it doesn't depend on a foreign issuer.

Geopolitical risk management: A 2026 survey by the OMFIF (a central-bank research network) found that most reserve managers cited protection from geopolitical risk as a key reason for buying gold, and the large majority said they see the global monetary system becoming more "multipolar," i.e., less centred on the US dollar.

The scale of buying: According to the People's Bank of China, official holdings reached roughly 2,366 tonnes by July 2026, after what was reported as the longest continuous buying streak in the central bank's history, 21 months in a row. However, analysts, including Goldman Sachs, believe China's actual purchases are significantly higher than the official figures suggest, since much of its buying happens through markets like London's over-the-counter gold market rather than being disclosed directly.

Broader trend: China isn't alone. Central banks globally have been buying gold at near-record levels for several years, and some forecasters expect this to continue given ongoing geopolitical tensions, trade disputes, and a more fragmented global financial system.

How do India and China's central banks see gold reserves?

Reacting to the ongoing development, Siddharth Maurya, Managing Director of Vibhavangal Anukulkara Pvt Ltd, said, "China’s central bank has been buying gold for 23 consecutive months, accumulating 740,000 ounces of the precious metal worth $3.1 billion in the latest round. Over that period, Beijing has added 4.67 million ounces—about $19.5 billion — and grown its gold reserves to roughly $323.5 billion in total. It is not a fleeting exercise in short-term trading. It is a deepening conviction in the virtues of hard assets as a hedge against devaluation and de-dollarisation."

"Meanwhile, there is an equally compelling story unfolding around India, which has official gold reserves of 880 tonnes valued at near $115–120 billion, placing it among the world’s top ten. China holds far more. But India’s true gold strength lies with its households, which own an estimated 25,000 tonnes—worth over $4 trillion, a stockpile larger than the combined reserves of the world’s largest central banks," he added.

"The RBI has also been withdrawing gold from overseas repositories, and focusing more closely on its domestic gold holdings. The India connection therefore goes far beyond a desire to emulate China’s monthly gold-buying binge, and is instead about recognising that India already possesses an immense and undervalued stock of gold bullion that, if leveraged through monetisation, gold-backed finance or sovereign wealth, could create powerful economic opportunities that harness its unique cultural attachment to gold, " Maurya said.

In September, the US dollar index rose, and prices of major financial assets declined overall globally. This comes after being influenced by the global macroeconomic environment and the monetary policies of major developed and developing economies. It prompted the country's foreign exchange reserves to fall over the month after the combined effect of exchange rate translation and changes in asset prices. Therefore, China stepped in to focus more on diversifying its reserves by buying more gold to maintain the overall stability of its foreign exchange reserves.