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The New Yukon Gold Rush - TARGETING 5 MILLION OZ. AT 1+ G/T
China’s central bank expanded its gold reserves for a 21st straight month in July, notching its biggest monthly purchase in nearly two years and intensifying a multi-year shift that major banks say is cementing a structural underpinning for bullion.
Official data released on Friday showed the People’s Bank of China lifted holdings by 640,000 ounces – roughly 20 metric tons – to 76.08 million ounces at the end of July, the largest addition since October 2023. The pace of accumulation has quickened steadily since March, when the PBOC added just 160,000 ounces.
The buying spree coincides with a rebound in gold prices. Spot bullion was trading above $4,310 an ounce after gaining 0.84% in July, snapping four consecutive months of declines and delivering the strongest monthly performance since February. Softer U.S. inflation readings and easing oil prices prompted traders to scale back expectations for further Federal Reserve rate hikes, helping to fuel the rally.
Several major forecasters see much more upside ahead. Michael Hsueh, research analyst at Deutsche Bank, said gold “remains in an explosive phase of the price process” and the bank expects prices to reach $4,700 an ounce by year-end, above its earlier fourth-quarter forecast. Aakash Doshi, head of gold strategy at State Street Investment Management, argued that Chinese and emerging-market central bank demand could push gold to $5,000 an ounce by late 2026 or early 2027.
Goldman Sachs noted in a recent report that official purchases led by the PBOC should help bullion bounce back from any short-term pressure originating from energy markets or interest rates. The bank estimated that the roughly 20-tonne rise in China’s average monthly sovereign gold buying since Western sanctions froze Russian central bank reserves in 2022 has contributed more than 20% to gold’s rally. It added that higher gold reserves reduce China’s vulnerability to sanctions and support renminbi internationalisation, reinforcing a structurally rising price trend.
The bullish narrative is backed by a broad upswing in official-sector demand. World Gold Council data showed global central bank net purchases rebounded to 289 tonnes in the second quarter, up more than 60% from a year earlier and well above the historical average. Ray Jia, the council’s head of research for Asia-Pacific excluding India, said that while some institutions may tactically adjust the pace of buying based on short-term price moves, surveys indicate hedging geopolitical risks and diversifying reserves remain the primary objectives, with price considerations not among the top priorities.
In a fresh signal of that trend, the Bank of Korea said this week it would raise gold’s share of its foreign exchange reserves over the medium to long term, ending a 13-year hiatus and citing heightened geopolitical risks and easing price pressures.
Infrastructure developments in Asia point to deeper structural support for gold demand. The Shanghai Gold Exchange has pledged to strengthen cooperation with Hong Kong and expand its international board. Hong Kong itself has launched a gold clearing and settlement system with 11 major banks as inaugural participants and aims to expand vault capacity to more than 2,000 tonnes within three years. Gross gold imports into the city surged nearly 29% month-on-month to 150.48 tonnes in June.
Taken together, the PBOC’s accelerating purchases are not an isolated tactic but the clearest expression of a broader central bank diversification wave. That dynamic, analysts argue, is building a structural floor under gold prices – limiting downside even when the dollar strengthens or rate expectations shift – and keeping the longer-term outlook firmly tilted to the upside.
