China continues its strategic gold accumulation, with the People’s Bank of China (PBoC) reporting its seventh consecutive monthly increase in gold reserves for May. The central bank added nearly 2 metric tons, bringing total purchases this year to 17 tons and raising its overall reserves to 2,296 tons, according to World Gold Council analyst Krishan Gopaul.
Despite the physical expansion, the USD valuation of China’s gold reserves slipped to $241.99 billion in May, down from $243.59 billion in April, as gold prices corrected from April’s record highs above $3,500 per ounce.
China resumed its gold buying in November 2024, following a six-month pause. The move coincided with heightened geopolitical uncertainty after Donald Trump’s re-election, signaling a renewed emphasis on financial resilience and de-dollarization.
Opening the Doors to Foreign Investors
In a parallel development, China is liberalizing its gold futures market. On May 27, the Shanghai Futures Exchange introduced sweeping reforms enabling foreign investors and brokers to directly access the domestic precious metals market. The 34-point reform package allows international participants to use foreign currencies—such as the US dollar—for margin deposits and hedging in gold and silver futures and options.
This marks a significant step toward internationalizing the renminbi and enhancing China’s role in global commodities pricing. These reforms are designed to attract global capital, modernize the Chinese financial system, and reduce dependence on Western trading hubs.
Positioning Shanghai as a Global Gold Hub
The reforms align with broader state-led efforts to elevate the Shanghai Gold Exchange (SGE) as a global benchmark alongside the London Metal Exchange. In April, China announced plans to expand SGE’s international delivery capabilities, including the creation of foreign-delivery warehouses, a move seen as pivotal in establishing a credible pricing alternative to the West-dominated gold market.
While specific details remain under wraps, the SGE currently handles gold, silver, and platinum, and is seen as central to Beijing’s ambitions of building commodity pricing power that reflects China’s global trade weight.
Bottom Line
China’s gold reserve expansion, combined with sweeping domestic market reforms and the push to elevate the Shanghai Gold Exchange, signals a multi-pronged strategy: reduce exposure to US monetary policy, internationalize the yuan, and shift more commodity pricing power Eastward.
These actions reinforce China’s long-term objective of financial sovereignty in a multipolar economic world.
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