China's Nonstop Gold Buying: Why Is Beijing Moving Away from the Dollar?

China's central bank raised its gold reserves for the 23rd consecutive month, buying about 23 tonnes of gold in September. This trend, alongside a reduced share of US Treasury bonds, reflects Beijing's effort to diversify reserves and reduce its dependence on the dollar.

In September, China's central bank continued to buy gold for the 23rd consecutive month; This country has imported this precious metal more than ever before, but what is behind the curtain of this thirst for buying and what does it mean for gold?

According to Ambassador Arjan, CNBC writes in a report: This thirst for purchases shows Beijing's effort to reduce dependence on the dollar, as well as the lack of safe alternative options for Chinese households. Analysts expect the demand for gold to remain high.

Data from the State Administration of China's Currency indicates that the country's central bank added about 23 tons of gold to its reserves in September, which is the largest monthly purchase in nearly three years. With this account, the chain of gold purchases by China's central bank reached its longest period since at least 2015.

According to CNBC, households as well as Chinese companies are turning to gold to preserve the value of their assets. According to the statistics of the Chinese customs, in the first eight months of 2026, this country set a record for the import of yellow metal and imported more than one thousand tons of gold worth 158.8 billion dollars. This figure is more than the total import of 886 tons in 2025 worth 96.5 billion dollars.

"Warm" winter waiting for the gold market

Akash Doshi, Head of Gold Strategy Unit at State Street Investment Management Company, says that gold imports to meet China's domestic demand have reached an unprecedented record in the first eight months of this year. According to him, the significant increase in gold price premium in China's domestic market indicates "stronger seasonal demand in winter".

The accumulation of gold by China takes place in a situation where the price of this metal has decreased. The price of gold dropped by more than eight percent in September and reached about 4,176 dollars per ounce; Meanwhile, its price crossed the $5,500 mark in January and left a record.

Backed by strong demand, Doshi predicts that gold prices will reach a range of $4,750 to $5,500 per ounce by the end of the first quarter of 2027.

Beijing's political motivation; In an effort to reduce dependence on the dollar

Carsten Menke, an analyst at Julius Baer Group of Switzerland, believes that the main motivation of China's central bank to buy gold is political. According to him, Beijing seeks to "reduce dependence on US Treasury bonds as a reserve asset" and derives from the use of the US dollar as a tool to exert pressure.

Western governments froze the assets of the Russian central bank after Russia invaded Ukraine in 2022; A move that highlighted that foreign currency reserves held abroad could easily be limited or blocked during geopolitical tensions; While the gold that is kept in the internal treasuries of a country, they are immune from such restrictions.

US Treasury Department data shows that China is still reducing the share of US Treasury bonds in its assets; So that the value of these assets reached 618 billion dollars in July, which is the lowest level in the last 18 years. This action was taken while Beijing continues to diversify its foreign exchange reserves.

In addition, gold's safe-haven status is fueling China's demand. According to CNBC, domestic investors in China do not have many alternatives; Because the real estate market, which was once the most important place to store household wealth, has been struggling with stagnation for several years.

Ole Hansen, Head of the Commodity Strategy Unit at Saxo Bank, says that "the opportunity cost of holding gold in China is also much lower compared to many western markets."

According to Karsten Menke, Beijing's plan to expand and deepen the domestic gold market has fueled the continuation of this unprecedented thirst for purchases and has encouraged the central bank to increase its reserves. He estimates that the Central Bank of China has purchased a total of 190 tons of gold this year by the end of August, of which 110 tons have not been officially announced.

China's contribution to gold's resistance against a sharp drop in price

China's strong demand has helped gold resist pressures that could have caused prices to fall further. The high yield of American bonds has been an obstacle to the demand to buy this precious metal. Unlike bonds, gold does not pay periodic interest, and typically, as interest rates rise, the price of gold is under pressure.

Eva Manti, commodity strategist at ING Bank, says: China's purchase of gold has become one of the important sources of structural support for the price of this metal. Central banks buy gold with a long-term approach and are much less sensitive to price volatility than retail investors.

Carsten Menke also reflects this approach and points out that despite the significant increase in interest rate expectations and the growth of bond yields, the price of gold remains higher than the summer levels, while the US Central Bank (Federal Reserve) has also shown signs of the possibility of another round of interest rate increases in 2026.

Statistics from the World Gold Council show that China was the fifth largest holder of this precious metal in the world by August, with 2,378 tons of gold. However, the country's gold reserves are less than one-third of the US reserves.

According to Ole Hansen, "any revival of confidence in China's real estate market and stock market could reduce demand for gold." "Also, a weakening yuan that makes gold more expensive in the domestic market or rising interest rates that make bank deposits more attractive may fuel a drop in demand."

In the end, he added: A bigger change will occur when central banks lose interest in diversifying reserves and geopolitical tensions decrease. Of course, it does not seem that any of these two events will happen in the near future.