The Rise of China as a Powerful Driver of Global Gold Demand

Key Takeaway

• China’s influence on global gold demand is becoming more structural, supported by central-bank purchases, household investment, institutional participation, and expanded trading infrastructure.

• The People’s Bank of China increased its reported gold reserves from about 1,950 tonnes in November 2022 to roughly 2,366 tonnes by July 2026.

• Gold demand is spreading to insurers, exchange-traded funds, and households, as weaker property markets, lower deposit rates and volatile equities reduce the appeal of traditional investments.

• Physical gold demand may exceed official data, with estimates suggesting the central bank bought 161.6 tonnes since January 2024, compared with 130.9 tonnes officially reported.

• Hong Kong is building infrastructure to support a larger role in global bullion markets, including new clearing systems, a link with the Shanghai Gold Exchange and expanded vault capacity.

China is emerging as a more influential force in the global gold market as demand grows among central banks, households, insurers, and investment funds. Jefferies analysts view the trend as a structural shift rather than a temporary surge in bullion purchases.

The People’s Bank of China remains central to the strategy. Its reported gold reserves increased from roughly 1,950 tonnes in November 2022, when purchases resumed, to about 2,366 tonnes by July 2026. The central bank added approximately 225 tonnes in 2023, the largest annual increase on record—with buying accelerating in the second quarter of 2026 and continuing into July.

However, official figures may understate the scale of China’s purchases. Estimates based on physical consumption, customs data, investment flows, and exports from major refining centers indicate that the official sector may have acquired 161.6 tonnes since January 2024, compared with the 130.9 tonnes reported by the central bank. That implies roughly 30 tonnes of potential undisclosed buying.

Gold demand is also spreading beyond the central bank. Regulators have authorized 10 insurers to invest in bullion, subject to a limit of 1% of total assets. Households are increasingly turning to bars, coins and gold ETFs as property markets weaken, deposit rates fall and equities remain volatile. Although jewelry demand has declined, Chinese gold ETF inflows have strengthened significantly since 2023.

At the same time, China is building the infrastructure to expand its role in global bullion trading. Hong Kong plans to introduce a new clearing and settlement system, establish delivery links with the Shanghai Gold Exchange and develop an offshore vault network. Planned storage capacity could rise from around 200 tonnes to more than 2,000 tonnes, highlighting ambitions that extend beyond accumulating gold to storing, clearing, settling, and trading it on a much larger scale.