China Buys Gold for 17 Consecutive Months... Global Central Banks' "Gold Rush" Sparks Outlook for Further Price Increases

Gold Prices Expected to Rebound After Recent Correction

With mounting geopolitical risks such as the Middle East war and growing concerns over inflation, central banks around the world are continuing to actively purchase gold this year.

'Year of the Horse' Gold Bar. Yonhap News Agency

On May 1 (local time), major foreign media outlets including The New York Times (NYT) reported that central banks in various countries have recently increased their gold purchases in an effort to diversify foreign exchange reserves.

Since Russia's invasion of Ukraine in 2022, the scale of central bank gold purchases has expanded, underpinning a multi-year bull market for gold. Recently, this buying trend has become especially pronounced among emerging markets such as Poland, Turkiye, and China.

According to data from the World Gold Council, these central banks continued to increase their gold holdings even after the Middle East conflict at the end of February.

Notably, the People's Bank of China, the central bank of China, increased its gold reserves by 160,000 ounces (about 5 tons) in March, marking a net buying streak for 17 consecutive months. This is the largest monthly increase in more than a year, since February 2025.

As geopolitical risks and external uncertainties persist, global central banks have become major sources of demand for gold. There is growing demand to reduce reliance on specific countries' currencies and debt, and to increase the share of assets relatively free from political or credit risk. Gold is also used as a hedge to protect against currency value declines during periods of inflation.

The NYT analyzed, "The shock that the Middle East war has dealt to the global financial system clearly shows why some central banks are turning to gold during a crisis," adding, "If the war escalates, this trend could intensify further."

As global central banks maintain strong gold buying momentum, some predict that the current pause in gold prices could give way to another rise.

Gold prices approached an all-time high of nearly $5,600 per ounce at the end of January, but then underwent a significant correction, falling by more than 10% over the course of March.

In a survey conducted in the first quarter of this year by the central bank-specialized publication Central Banking Publications, central bank officials projected that the price of gold would reach around $5,250 per ounce by the end of the year. This would represent an increase of about 15% from the current level of around $4,500.

This content was produced with the assistance of AI translation services.