China’s central bank adds gold as jewellery demand weakens

The People’s Bank of China added 23 tonnes of gold in September, lifting its third-quarter purchases to 63 tonnes, the strongest quarterly total since the third quarter of 2023. At the same time, weak jewellery consumption left Chinese wholesale gold demand 44% below its 10-year average, according to the World Gold Council.

The figures show official buying and investor demand continuing alongside subdued physical-market activity. September was the central bank’s 23rd consecutive month of reported gold purchases. Its reported holdings reached 2,410 tonnes, equivalent to 8.5% of total reserves, after additions of 103 tonnes since the start of the year.

The World Gold Council described the September addition as the largest since October 2023. These reported figures document continued official-sector accumulation; they do not establish why the bank made each purchase. Chinese gold-backed exchange-traded funds moved in the opposite direction from the weak jewellery market.

They added 11 tonnes in September, marking a third consecutive monthly increase, and held a record 304 tonnes at month-end. Their third-quarter accumulation totalled 27 tonnes. Seeking Alpha’s account links those inflows to portfolio diversification needs, weak equities, declining bond yields and continued official gold buying.

That explanation is an account of the reported drivers, rather than evidence that any single factor caused the flows. Prices pulled back during September. The London gold benchmark fell 8.5%, while the Shanghai benchmark declined 5.5% in yuan terms.

Seeking Alpha reported that prices steadied in early October, with the local price near RMB900 per gram and the international price above US$4,100 per ounce. These price movements accompanied the quarter’s contrasting demand signals: ETF holdings rose even as wholesale demand remained weak.

Trading through the Shanghai Gold Exchange also pointed to softer physical-market activity. Banks, jewellers and other participants withdrew 234 tonnes during the quarter, 21% less than a year earlier and well below the 10-year quarterly average of 418 tonnes.

The World Gold Council attributed the depressed wholesale demand in part to weak jewellery consumption, connecting the market’s reduced physical activity to the pressure on jewellery buying. The overall picture is not a uniform rise in Chinese gold demand.

Official purchases and ETF holdings grew, while jewellery-linked wholesale demand and exchange withdrawals lagged their historical benchmarks. The reported figures separate these channels: central-bank purchases, fund accumulation and physical-market activity moved differently over the same quarter.

The next evidence in this account is whether central-bank buying and ETF accumulation continue, and whether jewellery-related wholesale activity improves. The cited reporting documents September and third-quarter figures, but gives no subsequent outcome for those measures.