According to official figures just released by the World Gold Council, China is holding 2,063.84 tons, unchanged from the previous one. As the world gold price continues to increase, the value of China's gold increases accordingly. As of September 30, the value of the country's gold reserves increased to 191.47 billion USD, compared to 182.98 billion USD at the end of August.

Thanks to this price increase, the proportion of gold in the PBoC's total reserves increased to 5.7% at the end of October, compared with 4.9% at the end of April.

The PBoC has been one of the market’s main players, buying the most over a long period of time. The bank has been a net buyer for 18 months, and in May, it announced a temporary halt to its purchases. Analysts say the rising gold prices are the reason the PBoC is reluctant to pay too much for gold, while it is an important factor in pushing prices up.

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World gold prices increase sharply. Photo: CNBC

Bullion prices have risen about 33% so far in 2024, posting their biggest annual gain since 1979 amid a number of supportive factors, including the Federal Reserve's rate-cutting cycle, geopolitical tensions, uncertainty surrounding the US presidential election and strong demand from central banks.

Colin Cieszynski, chief market strategist at SIA Wealth Management, said the PBOC is not continuing to pay for gold purchases, and that they have a limit on how much they can afford. “It could be that they have bought enough gold or they are pausing for some reason. If they stop for how long? That’s all unknown,” he said.

Not just China, global central bank gold purchases, which surged in 2022 and 2023, will slow in 2024, according to the World Gold Council.

Analysts at Capital Economics say China’s gold rush is set to continue amid rising global tensions, economic uncertainty and continued efforts to move away from the dollar. It’s only a matter of time before China resumes buying gold.

Amid strong central bank gold buying and physical gold demand, China appears to be the main driver behind the gold price rally earlier this year.

In the long term, experts say China’s demand for gold will increase as its economy slows this decade. This will put upward pressure on gold prices and cause greater volatility in the gold market in the coming years.

With the ongoing difficulties in China's property market, gold is seen as a safer long-term investment by a growing number of domestic retail investors, who are waiting for gold prices to fall to buy more.

The PBoC will return to buying gold when the market stabilizes, according to analysts at Capital Economics.