China's central bank has continued its pattern of increasing gold reserves, marking the twentieth consecutive month of accumulation.
According to data from the State Administration of Foreign Exchange, as of the end of June 2026, the country's foreign exchange reserves stood at $3.4163 trillion, a decrease of $26 billion, or 0.75%, from the end of May. Concurrently, the central bank persisted in adding to its gold holdings. The nation's gold reserves reached 75.44 million ounces by the end of June, reflecting a month-on-month increase of 480,000 ounces, with the scale of purchases expanding further compared to May.
Key Details of the Accumulation Trend
Notably, this current cycle of gold accumulation began in November 2024. As of the end of June this year, the central bank has been consistently adding to its reserves for 20 straight months.
The State Administration of Foreign Exchange indicated that in June 2026, influenced by factors including macroeconomic data from major economies and central bank monetary policies and expectations, the US dollar index rose, leading to mixed movements in the prices of major global financial assets. The combined effect of currency translation and changes in asset prices resulted in the decline in the foreign exchange reserve balance for the month. The overall stable and progressively improving development of China's economy is conducive to maintaining general stability in the scale of foreign exchange reserves.
Review of Gold Market Performance
Looking back at the market performance this year, the international gold price surged at the beginning of the year. On January 29, spot gold in London hit a historical peak of $5,598.75 per ounce, before entering a phase of deep correction. For the first half of the year, the cumulative decline reached 7.2%, with a maximum drawdown approaching 30%. Entering mid-year, the gold price seesawed around the $4,000 per ounce level, hitting a new low for the period again on June 30. At the time of writing, spot gold in London is trading around $4,130 per ounce.
"Sustained gold purchases by global central banks have constructed a solid bottom support for the gold price," stated Liu Youhua, Research Director at Paipaiwang Wealth. He noted that central bank gold buying surged in the first half of the year, with institutional long-term allocation positions absorbing at lower levels. The area around $4,000 per ounce has become a market-recognized strategic buying zone, effectively curbing the potential for deeper declines.
Analyst Perspectives and Market Outlook
A research report from China Merchants Futures pointed out that despite experiencing a significant phased setback, the bull market for gold is not over. Global central banks, particularly China and Poland, have demonstrated a strong willingness to "buy the dip" aggressively during price declines. Furthermore, fine-tuning within the Federal Reserve's internal policy mechanisms and the demand-suppressing effect of high costs in the AI (artificial intelligence) industry introduce continued uncertainty into the US economy, which will provide long-term support for gold prices.
Looking ahead to the second half of 2026, China Merchants Futures believes gold is awaiting a reversal in interest rate hike expectations. It forecasts the annual average price to remain within a range of $4,000 to $4,800 per ounce. The high volatility of precious metals makes them more suitable as a long-term allocation within a major asset portfolio rather than for short-term speculation.
Investment Strategy Considerations
Regarding investment strategy, Liu Youhua suggests that long-term allocators could view levels below $4,000 per ounce as a window for phased positioning, using methods like dollar-cost averaging to smooth out volatility risks, and cautioned against mistaking rebounds for reversals and chasing highs. Short-term traders need to closely monitor the key pivot range of $4,000 to $4,150, adopting a range-trading mindset with strict position control. Subsequent core factors to watch include US employment and inflation data, changes in Federal Reserve rhetoric, geopolitical developments, and central bank gold-buying trends. These factors will determine whether the gold price transitions from "consolidating and digesting" towards "moving higher again" or continues to "grind within a range."
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