Key Takeaways:
China's central bank added 15 tonnes of gold to its reserves in June, the biggest monthly increase in more than two and a half years, official data showed Tuesday.
The People's Bank of China held 75.44 million fine troy ounces at the end of June, up from 74.96 million a month earlier, according to data published on the central bank's website.
The 480,000-ounce increase, equivalent to about 15 metric tons, marked the largest monthly addition since October 2023, when holdings rose by 740,000 ounces. The buying came despite spot gold tumbling 11.65 percent in June, its worst monthly performance since October 2008, with prices briefly breaking below $4,000 an ounce.
The accumulation extends the PBOC's buying streak to 20 consecutive months, signaling sovereign demand for bullion remains structurally strong even as prices correct. The value of China's gold holdings fell to $303.72 billion from $340.75 billion in May, reflecting the sharp price decline against a strengthening dollar and elevated expectations that the Federal Reserve would keep interest rates higher for longer.
Central Banks Buy the Dip
The PBOC's June purchase aligns with a broader pattern of central banks using price weakness to build reserves. Gold's 11.65 percent monthly decline — driven by dollar strength, sticky inflation concerns tied to the Iran conflict, and reduced Fed rate-cut bets — created a buying opportunity for reserve managers prioritizing diversification away from the greenback.
China's gold buying dwarfs most other central banks in volume. The PBOC has added roughly 400 tonnes to its reserves since restarting purchases in late 2022, according to data compiled by the World Gold Council. That pace positions China among the top three sovereign gold holders globally, behind only the U.S. and Germany.
What's Next for Gold
Spot gold's brief dip below $4,000 in June tested a key psychological level. The PBOC's willingness to add at those prices may provide a floor for bullion, particularly if other central banks follow suit. The next catalyst for gold is the Fed's July 29-30 policy meeting, where rate decisions will influence the dollar trajectory and, by extension, gold's appeal as an alternative store of value.
COMEX gold futures settled at $4,042.30 an ounce on Monday, up 1.2 percent from the June low but still 10.5 percent below the all-time high of $4,518.80 set in April. LBMA gold prices averaged $4,110.50 per ounce in June, according to exchange data.
This article is for informational purposes only and does not constitute investment advice.
