China Extends Gold Buying Streak to 17 Months
China’s central bank continued its aggressive gold accumulation in March, marking 17 consecutive months of purchases. The People’s Bank of China added 160,000 fine troy ounces, bringing total reserves to 74.38 million ounces.
Gold Holdings Decline in Value Amid Price Drop
Despite the increase in physical holdings, the total value of China’s gold reserves fell to $342.76 billion from $387.59 billion the previous month. This decline was largely driven by a sharp 16% drop in gold prices during March.
Market Concerns Over Central Bank Selling
The recent decline in gold prices has raised concerns among investors that central bank selling may be contributing to downward pressure. Additionally, ongoing geopolitical tensions—particularly in the Middle East—have heightened fears of a challenging macroeconomic environment.
In such a scenario, central banks could face rising inflation, slowing economic growth, and weakening currencies, potentially forcing them to liquidate gold reserves to stabilize their economies.
UBS Sees No Structural Shift in Gold Demand
However, UBS strategist Joni Teves downplayed concerns of a long-term reversal in central bank gold demand. He stated that it is highly unlikely the official sector is undergoing a structural shift away from gold accumulation.
Teves forecasts that global central banks will purchase between 800 and 850 tonnes of gold this year, only slightly below the approximately 860 tonnes recorded in 2025.
Central Banks Prefer Buying on Weakness
According to Teves, it is common for central banks to occasionally sell gold in certain months. Historically, they tend to build reserves during stable market conditions and take advantage of price dips rather than chase falling markets.
China’s Strong Demand Stands Out
Against this backdrop, China’s uninterrupted buying streak is particularly notable. Domestic gold prices in China have consistently traded at a premium compared to international benchmarks, indicating strong internal demand even as global sentiment remains volatile.
Gold Outlook: Volatility Ahead, Upside Intact
Looking ahead, Teves expects gold prices to remain volatile in the short term as markets continue to adjust to geopolitical risks. However, he views any price pullbacks as potential buying opportunities.
The strategist projects an average gold price of $5,000 this year, with a year-end target of $5,600. He argues that many long-term investors remain underexposed to gold, while ongoing concerns over inflation and economic growth continue to support demand for the metal.
