China Halts Gold Buying in May, Ending 18-Month Buying Spree

China Pauses Gold Buying in May

China’s central bank, the People’s Bank of China (PBOC), paused its gold buying in May, concluding an 18-month spree of continuous acquisitions as spot gold prices soared to record highs. Despite the pause, the value of China’s gold reserves rose, mirroring the elevated market prices. At the end of May, the reserves remained steady at 72.80 million troy ounces, worth $170.96 billion.

This halt in gold purchases coincided with a 1.4% decrease in spot gold prices, falling to $2,342 per ounce, a drop influenced by a previous rally. As of writing, the PBOC has not yet issued any statements regarding this shift.

Saxo Bank’s head of commodity strategy, Ole Hansen, commented: “China is nowhere near done buying gold, but the pause also highlights they are humans, balking at the prospect of paying record prices … Overall, gold is still consolidating and the news will likely prolong that phase, but overall the long-term bullish outlook has not changed.”

In 2000, China began strategically increasing its gold reserves, part of a broader policy to diversify its economic holdings and decrease its dependence on the U.S. dollar. This policy was designed to enhance financial stability against the backdrop of global economic shifts. By 2022, China had significantly stepped up its gold acquisitions, aligning with a worldwide trend among central banks to bolster national economies in response to rising inflation and persistent economic challenges.

In 2023, the People’s Bank of China emerged as the top official sector gold buyer globally, acquiring a record 7.23 million ounces — the largest annual purchase since records began in 1977, according to the World Gold Council. This accumulation is a central element of China’s extensive strategy to diversify and secure its reserves, reinforcing its financial security.

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