In a significant move, the People's Bank of China (PBOC) once again substantially increased its gold holdings in June. According to the latest official reserve assets data released by the PBOC, China's gold reserves reached 75.44 million ounces by the end of June, marking an increase of 480,000 ounces from the previous month. This expansion in purchasing volume represents a continuation of the central bank's gold accumulation strategy, now extending for 20 consecutive months.
Why the central bank continues to buy gold
Market analysts suggest the primary driver for the PBOC's continued purchases in June was a price correction in gold. The Federal Reserve's June policy meeting conveyed a more hawkish stance than markets had anticipated, contributing to a fourth consecutive monthly decline in international gold prices during that period. This price dip likely presented a buying opportunity.
A worldwide trend among central banks
This trend is not isolated to China. Globally, central banks have been intensifying their gold acquisitions in recent years. A recent report from the European Central Bank indicates that gold's share of total global official reserve assets had risen to 27% by the end of 2025, surpassing U.S. Treasury securities to become the largest component of official reserves worldwide.
Further supporting this trend, the World Gold Council's "2026 Central Bank Gold Reserves Survey" reveals sustained strong demand for gold among central banks. A record-breaking 45% of surveyed reserve managers expect their institutions to increase gold holdings over the next 12 months. Additionally, 84% of central bank respondents believe gold's share in global reserves will rise over the next five years, up from 76% last year.
The strategic rationale for gold
Experts point to diversification and security as key motivations. "Previously, central banks held a high proportion of their reserves in U.S. dollars. A high concentration in a single currency inherently carries certain risks and can impact national financial security," explained Fan Rui, head of non-ferrous metals analysis at Guoyuan Futures. "Gold, with its prominent value-preserving attributes, inflation-hedging capabilities, and absence of sovereign credit risk—making it less susceptible to freezing or default issues—serves as an excellent alternative to dollar reserves."
Recent gold price movements
Recent price action shows volatility. Wind data indicates that on June 30th, the spot price of London gold briefly fell to a low of $3,942.43 per ounce, its lowest level since November 6, 2025. Since the beginning of July, the price has experienced a modest, albeit choppy, recovery. As of 4:30 p.m. on July 8th, the spot price of London gold was quoted at $4,088.336 per ounce.
Outlook for gold prices
"The core factor behind the recent gold price decline is persistently high U.S. core inflation, which has forced markets to digest the Federal Reserve's outlook for 'higher for longer' interest rates," said Liu Siyuan, chief analyst at Lingxiu Finance. He added that a temporary stabilization in recent geopolitical conflicts has also reduced safe-haven demand. These combined factors have suppressed gold's performance. While international gold prices have seen a slight rebound after breaching the key psychological level of $4,000 per ounce, there may still be room for a short-term continuation of the downward trend.