China official Gold buying accelerates as it brings some of its Gold home

China’s official gold buying accelerated further in June, and the Chinese central bank is beginning to bring some of that gold home.

The People’s Bank of China (PBOC) officially purchased 640,000 troy ounces of gold in July. The nearly 20-tonne increase in reserves was the largest since 2023.

This came on the heels of a 480,000-ounce increase to China's official gold holdings in June.

The People’s Bank of China has officially added gold to its reserves for 21 straight months.

Year-to-date, the Chinese Central Bank has officially increased its gold holdings by nearly 60 tonnes. China now officially holds 2,366 tonnes of the yellow metal valued at $306.35 billion.

Notice I’m emphasizing the word "official."

China is among the central banks that are likely to hold significantly more gold than they publicly disclose. As Jan Nieuwenhuijs has reported, the People's Bank of China is secretly buying large amounts of gold off the books. According to data parsed by the Money Metals researcher, the Chinese central bank is currently sitting on more than 5,000 tonnes of monetary gold located in Beijing – more than TWICE what has been publicly admitted.

The mainstream is finally taking notice. Last month, Goldman Sachs picked up on China’s undisclosed purchases, and analysts at BMO Capital estimated that Chinese gold reserves could surpass the U.S.’s within five years.

Bringing its Gold home

China has also started moving some of its gold reserves from London to Hong Kong, joining other central banks in a gold repatriation movement.

Bloomberg reported that officials who asked to remain anonymous said the People’s Bank of China “has built up inventories in Hong Kong over the past few months,” and that this recent move “is accelerating a longer-term trend whereby the PBOC has been moving some of its gold reserves back home from London.”

The unnamed officials said the PBOC plans to continue relocating metal from London.

Chinese gold repatriation appears to be part of a broader strategy as China (and Asia more broadly) positions itself to become a bigger player in the global gold market.

Earlier this month, Hong Kong launched trial operations of its gold clearing and settlement system, putting the region in a position to challenge Western dominance of the global gold market. Meanwhile, Hong Kong officials plan to expand the region’s gold storage capacity from 200 to more than 2,000 tonnes over the next three years.

Bloomberg reported that the movement of gold from London to Hong Kong’s expanding vaulting facilities signals support for the new clearing system. When the system launched last month, PBOC Governor Pan Gongsheng said the central bank plans to continue allocating national foreign reserves to Hong Kong.

Hong Kong has also invited other countries to participate in the clearing system and to vault gold in the administrative region. Cambodia has already taken up Hong Kong’s invitation to store gold there.

As already noted, many countries are diversifying their gold storage or bringing their metal home.  

As a  Financial Times article summarized the trend, “Global central banks are removing gold from vaults in London and New York as they become more skittish about storing bullion outside their own borders, according to a new survey.”

India is one of the countries aggressively repatriating its gold. In the spring of 2024, the Reserve Bank of India brought 100 tonnes of gold home, repatriating it from vaults in the UK. Over the last six months, the Indian central bank has repatriated another 104 tonnes.

According to the Economic Times of India, U.S. weaponization of the dollar is one of the key factors driving gold repatriation, specifically aggressive sanctions levied on Russia after it invaded Ukraine and the freezing of Afghanistan’s reserves by Western powers.

Those episodes, involving G7 countries restricting access to sovereign assets, have reshaped how central banks think about custody.

Emerging market central banks and countries with strained relations with the U.S. aren’t the only ones bringing their gold home. France completed its gold repatriation project earlier this year. 

Metals Focus senior analyst Junlu Liang said gold repatriation shows how central banks are reassessing the role of gold in reserve management.

In some countries, domestic political considerations have further strengthened calls to relocate gold holdings closer to home.

Several other countries have repatriated gold in recent years, including the Netherlands, Australia, Poland, Hungary, and Romania. Meanwhile, there is a growing chorus of voices across the political spectrum calling on German officials to bring the country’s gold home.

This gold repatriation trend underscores the importance of holding physical gold free from counterparty risk.