On October 7, the central bank released its latest reserve data: at the end of September, gold reserves stood at 77.47 million ounces, an increase of 740,000 ounces month-on-month, marking the 23rd consecutive month of increased holdings and the strongest month since this round of increases. Meanwhile, international gold prices actually weakened in September, with London gold and COMEX gold both falling 6.52% in a single month.
This set of "buy and fall" data is far more valuable than simply shouting about price fluctuations.
| Central Bank Gold Purchase: Not Chasing Gains, It's 'Replacing the Base'
The central bank's core reason for buying gold is not for short-term trading, but to optimize the structure of foreign exchange reserves. Wang Qing, Chief Macro Analyst at Oriental Jincheng, pointed out that by the end of 2025, China's gold reserves will account for about 8.8% of international reserves, significantly lower than the global central bank average of 27%.
Gold is the globally widely accepted means of final payment; increasing gold holdings not only strengthens the credit of sovereign currencies but also provides a more stable credit foundation for RMB internationalization.
The World Gold Council survey also shows that 45% of surveyed reserve managers expect to continue increasing their gold holdings in the next 12 months, setting a new record. This means that central bank gold purchases are not a solo action by China, but a long-term trend toward global reserve diversification.
| Foreign Exchange Reserves: Slight decline, no need to overinterpret
At the end of September, China's foreign exchange reserves stood at 3,400.3 billion USD, down 38.1 billion USD month-on-month, a decrease of 1.11%. The main reasons are not complicated: the rise in the US dollar index, falling global financial asset prices, exchange rate conversions, and asset price changes together have pushed down the scale of dollar-denominated foreign reserves.
There is still support on the export side. Global AI capital expenditure remains high, with strong demand for chips, servers, and more; The consensus between China and the U.S. on a $30 billion goods reciprocal tariff reduction framework also helps improve exports of labor-intensive products.
In terms of cross-border capital flows, multinational corporations have fully implemented centralized operation of domestic and foreign currency funds, the two-way opening of financial markets continues to advance, and the attractiveness of RMB assets continues to rise.
In short: foreign reserves fluctuate in the short term, but the fundamentals remain stable.
| Why is gold prices pulling back? Short-term pressure comes from the dollar and interest rates
The September gold price pullback was mainly influenced by expectations of Federal Reserve rate hikes, rising U.S. Treasury yields, and a stronger dollar. HSBC has lowered its average gold price forecast for 2026 to $4,490/oz and $4,825/oz for 2027, citing expectations of interest rate hikes and rising oil prices as they may continue to weigh on gold.
On the other hand, Deutsche Bank data shows that net short CTA positions have reached their largest since October 2021, with the last month's selling at historically extreme levels.
Interestingly, gold prices did not hit new lows because of this—central banks continued to support the market and structural buying was still at play.
Jingtai's Perspective | If you don't chase highs in the short term, the long-term allocation value remains
Gold is currently in a state of "short-term pressure, long-term support." ：
In the short term: US Treasury yields remain high, the risk of a December rate hike has not fully disappeared, and gold prices are likely to experience significant volatility. Mid-term Outlook: Central bank gold purchases, global reserve diversification, and geopolitical uncertainty remain bottom support. In the long run: gold, as a non-sovereign and non-credit asset, still holds strategic value amid great power rivalry and monetary system restructuring.
Household allocation is controlled at 5%-10%, treating gold as the "ballast stone" of the asset portfolio rather than a short-term gaming tool. Avoid chasing highs or heavy bottom-fishing; wait for gold prices to stabilize or pull back, and gradually position your position.
Prioritize gold ETFs, savings funds, and other low-premium instruments, and participate cautiously in leveraged gold and futures.
Watch four signals: Federal Reserve policy meeting, US inflation and employment data, real US Treasury yields, and central bank gold purchase pace.
The central bank buys gold as a safety cushion; Investors buy gold for portfolio stability. Their goals differ, but their directions are the same: in uncertain times, they leave an extra buffer for assets. In the short term, gold prices will continue to fluctuate, but the long-term logic remains intact. For ordinary people, less "bottom-fishing impulse" and more "batch allocation" might be more comfortable.
