The People's Bank of China (PBOC) is once again demonstrating to the world its strategic commitment to gold, making in August its largest monthly purchase in three years. According to my data analysis, the regulator's reserves increased by 650,000 troy ounces, equivalent to approximately 20.2 metric tons of pure metal. This move is not merely a portfolio adjustment but a clear signal of a long-term de-dollarization policy.
Notably, Beijing has continued to build up its reserves for the 22nd consecutive month, yet August's pace stands out particularly sharply. For comparison: in February, the increase was only 30,000 ounces, and August's volume exceeded it by more than 21 times. The last time such impressive volumes were recorded was in October 2023, when 740,000 ounces entered the reserves.
Playing Ahead of the Curve
It is telling that the purchases coincided with the peak of the price rally. Over August, gold rose by approximately 10%, posting its best performance since January. The monetary value of reserves jumped from $306.35 billion to $350.08 billion, with the $43.7 billion difference reflecting not only the new metal but also a significant rise in quotations amid a weakening dollar.
During this period, the market was influenced by so-called "devaluation sentiment." Investors actively moved into safe-haven assets — gold and bitcoin — amid talks of possible expansion of quantitative easing programs and concerns over inflation. However, by the end of the month, the euphoria subsided somewhat following the hawkish rhetoric from the Fed Chair, leading to a correction in the spot market: the metal lost 1.75% after the release of strong U.S. labor market data.
My view: China is methodically using any dips to build up its reserves, confirming its strategy to reduce dependence on the dollar. For crypto investors, this is a positive signal: growing demand for "hard" assets from central banks creates a favorable backdrop for the entire class of safe-haven instruments, including bitcoin, which is increasingly perceived as digital gold. However, one should not forget that the Fed's macroeconomic policy remains the key driver of short-term volatility.