Recently, I noticed that China's pace of gold purchases has clearly accelerated. According to the latest announcement from the People's Bank of China, as of the end of March, China's gold reserves reached 74.38 million ounces, continuing a 17-month consecutive increase. Specifically, in March alone, there was an increase of 160k ounces compared to the previous month, roughly about 5 tons. Compared to the previous modest pace of 1 to 2 tons per month, this is a significant acceleration.

What’s interesting is the pattern of this pace change. After reopening in November 2024, China followed a trajectory of rapid accumulation, then a gradual slowdown, and recently a re-acceleration. By the end of 2024, the monthly increase peaked at up to 10 tons, then settled into a range of 1 to 2 tons, and in March, it rose again to about 5 tons. This indicates that the central bank has not stopped buying gold and is flexibly adjusting its pace according to market conditions.

The sharp decline in gold prices in March was driven by tensions between the US and Iran. Due to liquidity pressures, gold prices dropped by 12% in a single month, reportedly the largest decline since 2008. What happened during this period? Some emerging market central banks, including Turkey, Poland, and Gulf oil-producing countries, temporarily sold gold. For example, Turkey’s central bank reportedly sold about 60 tons of gold, worth roughly $8 billion, within two weeks of the outbreak of war to stabilize the exchange rate. However, I see this as tactical selling rather than a strategic shift in policy.

Meanwhile, countries with less influence, such as the Czech Republic and Uzbekistan, viewed this decline as a buying opportunity and increased their gold holdings, maintaining a net buyer stance. Although the purchase volumes were limited, this was a notable behavior. Additionally, March and April are seasonally low periods for global central bank gold purchases, and given the previous high prices and rising volatility, overall, the pace of buying has temporarily slowed.

Another point worth noting is that the officially published data on China’s gold purchases only represent a small part of actual demand. Comparing UK customs’ net gold export data with fluctuations in the London vaults, it becomes clear that about two-thirds of the official real gold purchases by central banks worldwide are not publicly disclosed. This suggests that unseen buying may be supporting the market. The overall picture of China’s gold demand has yet to surface fully. Despite tensions between the US and Iran, the long-term bullish case for gold remains intact, as can be inferred from this data.