Against the backdrop of global gold prices strengthening again and rising market risk aversion, the People's Bank of China continues to make large-scale purchases of gold.

According to the latest data from the People's Bank of China, as of the end of July 2026, China's gold reserves have risen to 76.08 million ounces, an increase of 640,000 ounces compared to the end of June. This marks the 21st consecutive month that the central bank has increased its gold holdings. Moreover, July saw purchases of 640,000 ounces, significantly higher than June's 480,000 ounces, indicating that the central bank's pace of gold purchases is accelerating further.

Meanwhile, international gold prices have recently seen a strong rebound. Spot gold briefly broke above the $4,300 per ounce mark this week, setting a new high since June. Against the backdrop of global central banks continuing to buy gold and rising expectations of a medium- and long-term weakening of the US dollar, central banks worldwide (especially China's central banks) have become an important force supporting the gold market's trend.

| Foreign exchange reserves slightly increased in July, and the central bank accelerated its pace of "hoarding gold" again

The latest data released by the State Administration of Foreign Exchange and the People's Bank of China show that in July, both China's foreign exchange and gold reserves saw positive changes:

1. Foreign exchange reserves edged up, holding above $3.4 trillion

As of the end of July 2026, China's foreign exchange reserves stood at 3,418.8 billion USD, an increase of 2.5 billion USD compared to the end of June. The State Administration of Foreign Exchange stated that this slight rebound was mainly influenced by a combination of factors, including the decline in the US dollar index in July and changes in global financial asset prices. At the same time, China's stable economic operation and strong resilience have provided strong support for the stability of foreign exchange reserves.

2. Gold reserves have increased for 21 consecutive years, with even stronger buying in July

While foreign exchange reserves have slightly increased, China's gold reserves have also continued to expand. By the end of July, China's gold reserves had reached 76.08 million ounces, an increase of 640,000 ounces compared to the end of June, marking the 21st consecutive month of gold increase by the central bank.

Looking at recent trends, the central bank's gold purchases are clearly increasing: in June, it increased its holdings by 480,000 ounces in a single month, setting a new high since October 2023; In July, the scale of purchases was further increased. This trend fully demonstrates that gold's importance in China's official reserve allocation is continuously increasing.

| Gold prices return to $4,300, UBS sets a long-term target of $5,000

Recently, international gold prices have strengthened again, once again drawing market attention to the value of gold allocation. On August 7, spot gold prices surged past the $4,300 per ounce mark, setting a new high since June.

Why did gold prices suddenly surge? Industry experts analyze that this round of rapid gold price increases is mainly due to three major "miracle aids":

Cooling inflation: The easing of US-Iran tensions has led to a decline in international oil prices. Coupled with weak latest US employment and inflation data, market expectations for Fed rate cuts have risen, weakening the dollar and directly pushing gold prices higher.

Risk aversion: As energy inflation pressures ease, gold's safe-haven logic has regained market favor.

Capital inflow: After previous adjustments, gold prices gradually stabilized, restoring pessimistic expectations, and funds such as gold ETFs flowed back in, providing strong momentum for the rebound.

UBS's latest report points out that this round of gold rally is not a short-term "impulse rally," but rather supported by solid structural support. Driven by expectations of declining real interest rates, a weaker US dollar in the medium term, and continued gold purchases by central banks worldwide, the medium- to long-term logic for gold remains solid. UBS expects international gold prices to climb back to a high of $5,000 per ounce by the first half of 2027.

| Global central banks collectively "buy stocks," building a solid bottom for gold prices

Besides China's central bank, central banks around the world are continuously buying gold. This official buying has become the most important force supporting the long-term trend of the gold market.

According to data from the World Gold Council, in the second quarter of 2026, central banks and official institutions worldwide will net increase their gold reserves by a total of 289 tons, a year-on-year surge of 62%. This indicates that after a brief adjustment in the first quarter, official gold purchasing demand has clearly rebounded.

瑞银指出，央行购金是黄金市场最重要的长期支撑因素之一。预计今年全球央行的购金量仍将维持在750至1000吨的高位。这意味着，即使私人投资者的需求出现阶段性放缓，央行持续的买盘依然能为金价提供坚实的“底部支撑”。

世界黄金协会6月的调研显示，有45%的受访央行预计在未来一年内继续增加黄金储备。这反映出黄金作为官方储备资产的战略地位正在不断提升。

From a longer-term perspective, global central banks' enthusiasm for buying gold is mainly driven by two main considerations: first, to re-examine excessive concentration of dollar assets to guard against credit risk; Second, in the context of global financial turbulence, increase gold allocation to diversify national reserve assets and enhance risk resistance.

Kingtech's Perspective | The central bank's "contrarian allocation" establishes a long-term valuation anchor; the logic of a long bull gold bull remains unchanged

The People's Bank of China has increased holdings for 21 consecutive months, with July setting a single-month record for this round. Coupled with a 62% surge in global central bank gold purchases in the second quarter, this sends a very clear strategic signal: gold, as a core asset for "de-dollarization" and "reserve diversification," has its long-term allocation value fully locked in by authorities worldwide.

This reverse approach of "buying more as prices fall" essentially builds a solid "policy bottom" for gold prices. Although the market has been highly volatile in the short term due to expectations of Fed rate cuts and sentiment from the Federal Reserve, the underlying macro logic (declining real interest rates, weakening US dollar credit) has not wavered, and gold's long-term bull market remains solid.

Abandon "chasing gains and cutting losses," use the "correction window" to gradually allocate core assets
Although UBS has set a $5,000 target price for the first half of 2027, investors must clearly recognize that short-term "short squeezing" rebounds and sentiment recovery can easily trigger sharp volatility. For ordinary investors, it is crucial to avoid blindly chasing above $4,300.

It is recommended to view the central bank's gold purchases as a long-term "valuation anchor," taking advantage of periods of temporary gold price corrections to gradually and buy on dips through gold ETFs or physical gold bars. Maintain a moderate single-digit allocation to gold in the portfolio, treating it as a "ballast stone" hedge against geopolitical risks and fiat currency depreciation, rather than a speculative tool for short-term profits.

Focusing on the structural dividends of the "gold industry chain" Against the backdrop of global central banks continuously "buying up" and the gold price center moving upward, upstream and downstream companies in the gold industry chain will also enter a long-term period of earnings realization.

It is recommended that investors move beyond the simple "gold price speculation" mindset and focus on gold industry chain targets with core barriers. For example, upstream mining companies with high-quality gold resources and high-growth gold output (directly benefiting from rising gold prices); and financial infrastructure companies benefiting from the expansion of cross-border settlement and gold clearing businesses amid the global wave of de-dollarization.