As gold prices pull back, China’s central bank has further increased its gold allocation. Data released by the People’s Bank of China on Wednesday (Oct 7) showed official gold reserves rose by 21 tonnes in September, marking the largest monthly increase in three years and extending its consecutive buying streak to 23 months. Meanwhile, China and Poland keep advancing their gold purchase plans, demonstrating gold’s prominent role in official reserve diveRSIfication.

21 Tonnes Added in September, Biggest Monthly Gain in Three Years

According to PBOC data, China’s official gold reserves climbed to 2,196 tonnes by the end of September. Wind financial data shows the September addition was the highest since September 2023, when China added 24 tonnes of gold reserves.

The September purchase also outpaced the prior two months. Wind figures show China added 18.5 tonnes in August and 18 tonnes in July. With gold prices falling earlier this year, the PBOC has noticeably accelerated gold purchases and steadily expanded its gold holdings.

This pace of buying shows that short-term price corrections have not altered the central bank’s long-term preference for gold allocation. Nevertheless, official gold purchases mainly serve reserve management purposes, and continuous buying does not directly signal an immediate reversal in gold’s short-term price trend.

Foreign Exchange Reserves Fell by $38.1 Billion; Valuation Changes Were the Main Factor

Data from the State Administration of Foreign Exchange (SAFE) showed China’s foreign exchange reserves stood at $3.4 trillion at the end of September, down $38.1 billion or 1.11% from the end of August.

SAFE stated that the rising US Dollar Index and an overall decline in global major financial asset prices drove the drop in reserve size through currency conveRSIon and asset valuation effects.

SAFE also noted China’s economy remains generally stable with growing new growth drivers, which helps keep foreign exchange reserves broadly steady. Therefore, monthly declines in reserve balances cannot be simply equated to capital outflows of the same magnitude; exchange rate and asset valuation shifts must also be considered.

Global Central Banks Bought a Net 39 Tonnes in August; China and Poland Lead the Pack

The World Gold Council’s latest central bank gold update reported net purchases of 39 tonnes by global central banks in August, bringing total purchases for the year to 170 tonnes as of August.

Marissa Salim, Senior Research Lead for ASIa Pacific at the World Gold Council, said large buyers that kept buying gold in 2026 remained active in August. China led demand for the month, followed by Uzbekistan and Poland. Demand was again dominated by central banks executing multi-year purchase plans, showing strong continuity in this round of gold buying.

In terms of cumulative purchases for the year, Poland ranks first with 98 tonnes and China second with 80 tonnes. Poland’s gold reserves now stand at 648 tonnes, moving closer to its target of 700 tonnes.

Sustained Purchases Offer Long-Term Support; Seasonal Patterns Still to Be Confirmed

Salim pointed out data from 2016 to 2025 reveals some seasonal variation in central bank gold buying, though year-on-year fluctuations remain substantial. Economic or geopolitical uncertainties may play a role, yet further analysis is needed to confirm stable, peRSIstent driving factors.

For the gold market, China’s 23 consecutive months of purchases together with long-term gold buying programmes by central banks such as Poland deliver sustained official-sector demand. This reflects gold’s appeal as a reserve asset, yet short-term prices will still be influenced by the US dollar, Treasury yields and monetary policy expectations.