China Bought 20 Tons of Gold in August, Its Biggest Haul in Nearly Three Years

In August, China's central bank added 650,000 ounces of gold to its reserves, marking the largest monthly increase since October 2023. This surge marks the 22nd consecutive month of buying by Beijing. The recent purchases intensified as gold achieved its strongest monthly gain since January. The People's Bank of China (PBOC) expanded its holdings by 30,000 ounces in February.

August's addition equates to over 20 times that figure, according to State Administration of Foreign Exchange (SAFE) data. By the end of the month, reserves totaled 76.73 million fine troy ounces. The 650,000-ounce gain translates to approximately 20.2 metric tons of gold. The People's Bank of China last expanded its gold reserves in October 2023, adding 740,000 ounces.

The reported value of Chinese gold holdings rose to $350.08 billion from $306.35 billion, a $43.7 billion increase primarily due to higher gold prices. The buying spree occurred amid a robust month for gold, which surged by approximately 10% in August, the best performance since January. The rally was fueled in part by a renewed interest in gold due to the US Treasury's debt buyback plan, which raised concerns about inflation and a weaker dollar.

This, in turn, prompted investors to seek refuge in precious metals like gold and Bitcoin (BTC). However, the momentum for gold waned towards the end of August. Federal Reserve Chair Kevin Warsh adopted a more hawkish stance, reigniting speculation of additional US rate hikes. As of September, spot gold has declined by 0.27%.