China's central bank has increased its gold purchases to their highest level since 2023. Demand is driving up prices.

The People's Bank of China increased its gold reserves by 650,000 troy ounces in August—the largest monthly increase since October 2023, according to China Daily. In addition, the Chinese central bank accelerated the pace of its gold purchases compared to July and June, the publication noted. The regulator, which is among the world’s largest official buyers of gold, has continued to purchase gold for 22 consecutive months, it added.

Purchases picked up amid a sharp rise in precious metal prices: in August, gold rose in price by nearly 10%, according to Bloomberg. The rally was fueled by renewed interest in hedging against the dollar’s depreciation following the U.S. Treasury’s decision to increase the volume of government debt buybacks: investors began seeking alternative safe-haven assets, including gold, the agency reports.

The People's Bank of China's sustained accumulation of gold, along with purchases by other sovereign investors, has bolstered the confidence of some of the most optimistic market participants in the metal's long-term prospects, although high government bond yields remain a short-term headwind for gold, which does not pay interest, Bloomberg reported.

The spot price of gold fell 0.6% during trading on Monday, September 7, to $4,405 per troy ounce.

By early June 2026, gold had surpassed U.S. Treasury bonds to become the world’s leading reserve asset, according to the European Central Bank. A June survey by the World Gold Council showed that nearly half of the 74 central banks surveyed planned to increase their gold reserves over the next 12 months, and only one central bank intended to reduce them.

Following the rally in 2025, gold prices in 2026 have been anything but stable. In June, for example, the price of gold fell by 12%, marking the steepest monthly decline since 2008, according to Bloomberg.

Shares of Newmont, the world’s most valuable gold mining company, have risen 28% since the beginning of 2026. Shares of Agnico Eagle Mines, the second-largest company by market capitalization, have gained nearly 21%. Meanwhile, shares of Barrick Mining Corp., which rounds out the top three, have risen by only 2.8%.

This article was AI-translated and verified by a human editor