China's foreign exchange reserves remained above $3.3 trillion for the sixth consecutive month as of the end of January 2026. Concurrently, the central bank increased its gold reserves for the 15th straight month. Data showed the country's foreign exchange reserves reached $3.3991 trillion at the end of January, up $41.2 billion from the end of December 2025, representing a 1.23% increase.
The State Administration of Foreign Exchange attributed the rise in reserves to a declining US dollar index and increasing global financial asset prices, influenced by fiscal and monetary policies of major economies. The stable and improving domestic economy further supported the stability of the reserve scale.
Analysts noted that the US dollar remained weak in January due to multiple factors, including heightened geopolitical risks from military actions or threats by former President Trump in regions like Venezuela, Iran, and Greenland, which elevated dollar credit risks. Additionally, Trump's暗示 tolerance for a weaker dollar triggered market sell-offs. Hawkish signals from Federal Reserve officials and expectations for a new Fed chair also contributed to rising US Treasury yields and overall increases in global asset prices.
With continued enhancements in cross-border investment and financing facilitation policies, China's capital market is expected to remain attractive to foreign investors. The resilient and steadily advancing economy provides solid support for maintaining stable foreign exchange reserves.
Gold reserves stood at 74.19 million ounces by the end of January, an increase of 40,000 ounces from the previous month. This marks the 15th consecutive month of gold accumulation since the central bank resumed purchases in November 2024. However, the increment in January was the 11th straight month of low-level growth. Analysts suggested that the rapid rise in international gold prices during January contributed to the modest scale of central bank purchases.
The continuous, though small, increases in gold holdings during a period of record-high international prices signal an effort to optimize the structure of international reserves. Given ongoing changes in the global political and economic landscape, gold prices may remain prone to increases over an extended period, enhancing the necessity of holding gold as part of international reserves.
Despite recent significant fluctuations in gold prices, the overall trend of central bank accumulation is expected to continue. Gold experienced substantial volatility in January, with sharp rises and falls, and continued seesaw movements into February. Despite two significant declines, both futures and spot gold prices recovered to above $4,900 per ounce. COMEX gold and London spot gold closed the week at $4,988.6 and $4,666.61 per ounce, respectively, with weekly gains of 1.65% and 1.77%.
Wall Street institutions are divided on gold's outlook. JPMorgan analysts maintain a firm bullish stance on gold's medium-term trajectory, expecting demand from central banks and investors to push prices to $6,300 per ounce by the end of 2026. In contrast, Citigroup anticipates that reduced geopolitical risks, ideal US economic growth, and confirmed Federal Reserve independence in the second half of 2026 could decrease hedging demand, exerting significant medium-term downward pressure on gold prices. Tom Lee, a well-known Wall Street analyst, suggested that gold prices may have already peaked based on historical data research.
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