• Goldman Sachs (GS) identifies China as the largest known central bank gold buyer in August, with purchases of 25 tonnes.
  • The buying extends China's aggressive accumulation streak, though the exact figure may differ from official data.
  • Gold prices remain under pressure from rising yields and a strong dollar, despite robust central bank demand.

China's Gold Buying Spree Continues

China was the largest identifiable buyer of gold in August, purchasing 25 tonnes, according to a Goldman Sachs note. The bank's analysis underscores the ongoing trend of central banks diversifying their reserves into bullion, a shift that has gained momentum since 2022.

While the 25-tonne figure has not been independently verified, it aligns with the broader narrative of China's sustained gold accumulation. The World Gold Council reports that China bought approximately 20 tonnes in August and was indeed the largest reported buyer that month. The discrepancy may stem from different methodologies or reporting periods, but the direction is clear: China remains a dominant force in the official gold market.

In September, China added another 23 tonnes, extending its buying streak to 23 consecutive months, according to official data. Its total holdings now stand at around 2,410 tonnes. The purchases come as central banks globally seek to reduce reliance on foreign-currency assets, particularly the US dollar.

Market Dynamics: Demand vs. Dollar

Despite the robust central bank demand, gold prices have faced headwinds. Spot gold was quoted at $4,113.89 an ounce on October 7, down 1.2% for the session and near a two-month low, as reported by Reuters (TRI). The precious metal has been pressured by a stronger dollar and higher bond yields, which increase the opportunity cost of holding non-yielding assets.

The contrasting forces highlight the complex interplay between official-sector buying and market-driven pricing. "Central-bank demand can provide structural support while interest-rate expectations, currency moves and investor positioning drive prices in the opposite direction over shorter periods," noted Goldman Sachs research.

Goldman's analysts, Lina Thomas and Daan Struyven, expect central bank purchases to remain elevated, forecasting an average of 50 tonnes per month in 2026, up from 17 tonnes per month before 2022. They project gold at $4,900 an ounce by end-2026, though they caution that options hedging can amplify price swings in either direction.

Geopolitical and Economic Undercurrents

The acceleration in central bank gold buying is partly attributed to concerns about geopolitical and financial risks, particularly following the freezing of Russian central bank assets in 2022. For China, diversifying reserves into gold reduces exposure to potential sanctions and enhances financial resilience.

However, analysts like Commerzbank (CBK.DE)'s Thu Lan Nguyen characterize the strategy as risk management rather than a sudden abandonment of the dollar. "Gold cannot replace all the international-payment and liquidity functions of dollar reserves," she said.

Domestic investors in China have also shown increased appetite for gold. Purchases of gold bars and coins rose 28.4% in the first half of 2026 from a year earlier, according to the China Gold Association, as households seek savings alternatives amid property-market weakness.

As central banks continue to accumulate gold, the metal's role in the global financial system remains a topic of intense debate. While the buying provides a floor for demand, the path of prices will depend on the tug-of-war between official purchases and macroeconomic factors like interest rates and currency moves.

Clarification: An earlier version of this article misstated the month of China's 23-tonne purchase. It occurred in September, not August.