Key Points
- Strategic Buying: The People’s Bank of China (PBOC) increased gold holdings to 74.19 million fine troy ounces by the end of January.
- Valuation Surge: Total gold reserves are now valued at $369.58 billion, up significantly from $319.45 billion in December.
- Market Correction: Global gold prices, which hit a record $5,600 per ounce in January, have retreated to approximately $4,960 following shifts in U.S. monetary expectations.
- Shifting Demand: While the central bank buys, Chinese retail jewelry consumption fell 3.75% in 2025, though investment in bars and coins rose by over 35%.
In a move that signals a sustained shift away from dollar-denominated assets, the People’s Bank of China (PBOC) confirmed on Saturday, February 7, 2026, that it has extended its gold buying spree for the 15th straight month. According to official data, the central bank’s holdings reached 74.19 million fine troy ounces in January, a steady climb from the 74.15 million ounces recorded in December.
This consistent accumulation comes at a time of peak global uncertainty, where gold serves as a critical hedge. The total value of these reserves has skyrocketed to $369.58 billion, reflecting both the increased volume and the high price environment of early 2026. Analysts suggest that this strategy is part of a broader “de-dollarization” push, as Beijing prepares for a multi-polar financial future.
The “Warsh Shock” and Market Fluctuations
The international gold market has recently experienced unprecedented volatility. In mid-January, speculative buying and central bank demand pushed spot gold to a historic peak of nearly $5,600 per ounce. However, this rally faced a sharp correction following the surprise nomination of Kevin Warsh as the next chair of the U.S. Federal Reserve.
Warsh, known for a more hawkish stance on inflation and a preference for a stronger dollar, immediately altered market sentiment. The prospect of tighter monetary policy caused gold prices to plunge as low as $4,403 earlier this week. As of Saturday, the metal has found support near the $4,960 mark, as bargain hunters enter the market following the steep sell-off.
Divergence in Chinese Domestic Demand
While the PBOC remains a “whale” in the gold market, domestic consumption patterns among the Chinese public are undergoing a structural shift. Data for the full year of 2025 shows that total gold consumption in China fell by 3.75% to 950 metric tons, marking the second consecutive year of decline.
The high price of gold has significantly cooled the appetite for traditional jewelry, which saw a double-digit percentage drop. Conversely, safe-haven demand among retail investors is booming. Purchases of gold bars and coins surged by 35.14% in 2025, now accounting for more than half of China’s total gold consumption for the first time in history.
The Outlook for Global Reserves
The PBOC’s activity is part of a wider trend among global central banks, which collectively added over 860 tonnes to their reserves in 2025. While this is slightly lower than the record-breaking 1,000-tonne benchmarks of previous years, the structural demand for gold remains a primary pillar of the market. Experts believe that as long as fiscal concerns in major Western economies persist, the pivot toward gold by Eastern powers will remain a dominant theme for the remainder of 2026.
