China Is Buying Gold, Sending Prices to Record Highs

As gold surged this year to its highest price ever, Xena Lin joined the frenzy by making monthly purchases of gold “beans,” pebble-like morsels of the precious metal.

For Ms. Lin, a 25-year-old administrative worker in southern China, the $80 beans — small enough to rest on a fingertip and weighing about one-thirtieth of an ounce — were an affordable way to buy into the gold excitement without splurging for jewelry, gold bars or coins. She had dabbled with investing in stocks in the past, but she said buying gold, especially in this fun way, inspired her to continue investing.

“I’m still working hard to save more,” Ms. Lin said.

Often considered a safe investment during times of geopolitical and economic turmoil, gold has soared in price in response to Russia’s invasion of Ukraine and the war in Gaza. But gold’s climb to highs above $2,400 per ounce has proved more resilient, and lasted longer, because of China.

Chinese consumers have flocked to gold as their confidence in traditional investments like real estate or stocks has faltered. At the same time, the country’s central bank has steadily added to its gold reserves, while whittling away at its holdings of U.S. debt. And throwing fuel on the fire are Chinese speculators betting that there is still room for appreciation.

China already held considerable sway in gold markets. But the country’s influence has become more pronounced during this latest bull run — a nearly 50 percent increase in the global price since late 2022. It continued to scale new heights despite factors that traditionally make gold a comparatively less appealing investment: higher interest rates and a strong U.S. dollar.

Last month, gold prices vaulted higher even after the Federal Reserve signaled that it would keep higher interest rates for longer. And it has continued to appreciate even as the dollar has risen against almost every major currency in the world this year.

Prices have pulled back to around $2,300 per ounce, but there is a growing sentiment that the gold market is governed no longer by economic factors but by the whims of Chinese buyers and investors.

“China is unquestionably driving the price of gold,” said Ross Norman, chief executive of, a precious-metals information platform based in London. “The flow of gold to China has gone from solid to an absolute torrent.”

Gold consumption in the country rose 6 percent in the first quarter from a year earlier, according to the China Gold Association. It came on the heels of a 9 percent increase last year.

Gold investing became more alluring as traditional investments turned lackluster. China’s real estate sector, the destination for most families’ savings, remains in crisis. Investor confidence in the country’s stock markets has not fully returned. A string of big investment funds aimed at the wealthy toppled after failed bets on real estate.

With few better alternatives, money flowed into Chinese funds that traded in gold, and many young people took to collecting beans in tiny quantities.

Online merchants are aggressively hawking gold beans. On Alibaba’s Taobao, one of China’s biggest e-commerce platforms, a merchant sold gold beans on a livestream — a blend of the Home Shopping Network and Amazon. She said buying beans was “like shopping, but an investment.”

The tiny beans came in five shapes, including one that resembled a peanut and another like a persimmon. Paying $87 per bean, a person could buy into the gold boom for the price of a hot pot meal, she said.

Kelly Zhong, a teacher in Beijing, started buying gold in 2020 at the outset of the pandemic. She has amassed more than two pounds of gold bars, but she has also invested in the metal through exchange-traded funds. She said she was inspired by an old saying: “Jade in prosperous times, gold in troubled times.”

As she felt the world become more chaotic, Ms. Zhong added to her stockpile, betting that gold prices would only climb. She has stopped buying, but she is not ready to sell. She sees no reason to. The Chinese economy is still struggling, and neither real estate nor stocks seem like a sound investment.

“The money has to go somewhere,” she said.

Another major buyer of gold in China is the country’s central bank. In March, the People’s Bank of China added to its gold reserves for a 17th straight month. Last year, the bank bought more gold than any other central bank in the world, adding more to its reserves than it had in nearly 50 years.

Beijing is buying up gold to diversify its reserve funds and reduce its dependence on the U.S. dollar, long considered the most important currency to hold in reserve. China has been reducing its U.S. Treasury holdings for more than a decade. As of March, China had about $775 billion worth of U.S. debt, down from about $1.1 trillion in 2021.

When China increased its gold holdings in the past, it bought domestically using renminbi, said Guan Tao, global chief economist at BOC International in Beijing. But this time, he said, the bank is using foreign currencies to buy gold — effectively reducing its exposure to the U.S. dollar and other currencies.

Many central banks, including China, starting acquiring gold after the U.S. Treasury Department took the rare step of freezing Russia’s dollar holdings under sanctions imposed on Moscow. Other American allies imposed similar restrictions for their currencies.

Mr. Guan said the sanctions had shaken the “foundation of trust for the current international monetary system” and forced central banks to protect their reserves with more diverse holdings. “We can see this wave of gold’s rise may be different from the past,” he said.

Although Beijing has been buying up gold, the metal accounts for only about 4.6 percent of China’s foreign exchange reserves. In percentage terms, India holds nearly twice as much of its reserves in gold.

The combination of aggressive retail buying from Chinese consumers and central bank purchases has drawn the interest of speculators on markets in Shanghai who are betting that this trend will continue. Average trading volume for gold on the Shanghai Futures Exchange more than doubled in April from a year earlier.

“They are swimming with the tide,” said Mr. Norman from MetalsDaily. “China is now dominating the gold market.”

For Ms. Lin, buying gold beans is satisfying, she said, because it feels like frivolous shopping but she’s actually investing her money in something she can touch. She said she would continue to buy more beans.

“The price of gold always goes up and down,” she said. “But the increase is within the range that I can bear, so I think it’s OK.”

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