China’s foreign exchange reserves surged to $3.442 trillion in May 2026, the highest level since October 2015, according to TradingView. The People’s Bank of China (PBOC) also extended its gold-buying streak to 19 months, with reserves rising to 74.96 million fine troy ounces, per China Daily. The move underscores Beijing’s strategic efforts to diversify its reserves amid global economic uncertainty.
China’s Forex Reserves Reach 10-Year High
China’s foreign exchange reserves climbed by USD 31.7 billion in May 2026, reaching $3.442 trillion, a 0.93% increase from $3.411 trillion in April. This marks the highest level since late 2015, driven by a stronger U.S. dollar and rising global asset prices. The State Administration of Foreign Exchange attributed the growth to the country’s “steady economic progress,” which provided “solid support for reserve stability.” The increase aligns with broader trends of central banks bolstering reserves amid geopolitical turbulence and inflationary pressures.
Gold Accumulation Continues Amid Global Shifts
The PBOC added 320,000 ounces to its gold reserves in May, pushing total holdings to 74.96 million ounces, the highest since December 2024. This follows 19 consecutive months of purchases, a streak that has seen China’s gold reserves grow steadily despite volatile bullion prices. China Daily noted that the May purchase was the largest monthly increase since December 2024, when the PBOC added 330,000 ounces. Analysts suggest the purchases reflect a long-term strategy to reduce reliance on U.S. dollar-denominated assets.
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Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, highlighted that gold accounted for just 8.8% of China’s official reserves by the end of 2025, far below the global average of 27%. “This suggests considerable room for further accumulation,” he said, citing European Central Bank data. The disparity underscores the challenge China faces in catching up to Western central banks, which have historically held larger gold reserves as a hedge against currency devaluation.
Global Context and Strategic Implications
China’s gold-buying strategy mirrors broader moves by emerging markets to diversify away from U.S. Treasury securities. In 2024, the PBOC’s gold purchases accelerated as Beijing sought to mitigate risks from U.S.-China trade tensions and sanctions. The current pace of accumulation—averaging 320,000 ounces monthly—could close the gap with global peers over the next few years, though analysts caution that structural changes in reserve management take time.
The PBOC’s actions also reflect a shift in global monetary policy. With the U.S. Federal Reserve maintaining high interest rates and the European Central Bank recalibrating its stance, many central banks are reevaluating their reserve compositions. China’s focus on gold aligns with this trend, as bullion has historically served as a safe-haven asset during periods of market stress. However, the recent volatility in gold prices—driven by mixed economic signals and geopolitical risks—adds complexity to the strategy.
What Comes Next?
Analysts predict the PBOC will maintain its gold-buying momentum in 2026, particularly if global markets remain unsettled. The central bank’s ability to sustain purchases will depend on domestic economic performance and international price movements. Meanwhile, the broader implications for global finance remain significant: a continued rise in China’s gold reserves could pressure Western central banks to adjust their own strategies, potentially reshaping the balance of power in international monetary systems.
For now, the PBOC’s dual focus on forex reserves and gold highlights Beijing’s dual objectives: stabilizing its economy and asserting influence in global finance. As Wang Qing noted, “There is considerable room for further accumulation,” but the path forward will require navigating a delicate interplay of domestic priorities and global dynamics.
