On August 7, 2026, the international precious metals market witnessed a dual heavyweight moment of "data + market movement": official reserve asset data released by the People's Bank of China showed that China's gold reserves rose to 76.08 million ounces by end-July, up 640,000 ounces month-on-month, expanding further from the previous month and extending the record to 21 consecutive monthly increases. At the same time, spot gold broke firmly above the $4,300 per ounce round level during the Asian trading session, with intraday gains at one point exceeding 1.5%. Sustained national-level gold buying and a return of market capital formed a rare resonance at this moment.
Central bank accelerates purchases: 640,000 ounces bought in July
The latest central bank data show that as of end-July 2026, China's gold reserves stood at 76.08 million ounces, up 640,000 ounces from 75.44 million ounces at end-June, equivalent to approximately 2,366 tons. Notably, the July increase was significantly larger than June's 480,000 ounces, indicating that the central bank's pace of gold buying is quickening. Since the start of the current accumulation cycle in November 2024, the People's Bank of China has increased gold holdings for 21 consecutive months, becoming one of the most steadfast buyers among global central banks.
Foreign exchange reserve data released at the same time showed that China's foreign exchange reserves totaled $3,418.776 billion at end-July, up $2.514 billion from end-June, an increase of 0.07%. The foreign exchange authority said that amid global macroeconomic conditions and monetary policies of major economies, the dollar index fell in July, and the combined effects of exchange rate translation and asset price changes pushed foreign exchange reserves to a modest recovery. With foreign exchange reserves rising steadily and the share of gold continuously increasing, the diversified allocation path of China's official reserve assets is becoming increasingly clear.
Global gold buying wave: Central banks net purchased 289 tons in Q2
The People's Bank of China's choice is not an isolated case. A report released by the World Gold Council at the end of July showed that global central banks and other official institutions collectively net increased gold holdings by 289 tons in the second quarter of 2026, up 62% year-on-year, with gold-buying activity markedly recovering among central banks of multiple countries. The previously released 2026 Central Bank Gold Reserves Survey also showed that 45% of surveyed central banks expect to increase their own gold reserves within the coming year.
Analysts believe that the deep logic behind this round of global central bank gold buying lies in the fragmentation of geopolitics and the reconstruction of the dollar credit system, under which gold as the "ultimate asset" free of sovereign credit risk has seen its reserve value repriced. Unlike individual investors pursuing short-term price differentials, central bank gold purchases are typically long-term, strategic, and counter-cyclical, and are not swayed by interim price fluctuations. This means that even with gold prices at historical highs, central banks' allocation demand still provides a solid "safety cushion" for the market.
Gold price back above $4,300: Triple tailwinds drive the rally
On the same day the central bank data were released, international gold prices continued their strong performance this week. As of the time of writing on August 7, spot gold broke above $4,300 per ounce, rising about 1.4% to 1.6% on the day, hitting a new high since mid-June and posting a fourth consecutive daily gain. Spot silver also strengthened in tandem, at one point surging over 4% to near $64 per ounce.
Qu Rui, Senior Deputy Director of the Research and Development Department at Golden Credit Rating, noted that this round of rapid gold price gains is mainly driven by three factors:
- Geopolitical risks have cooled, and inflation expectations have eased. Signs of a de-escalation in the US-Iran situation emerged, as Iran stated that it had reached an agreement with Oman on opening a temporary shipping lane in the Strait of Hormuz. International oil prices fell sharply, and market concerns that energy prices would push up inflation were significantly alleviated, allowing gold's safe-haven and inflation-hedging properties to recover simultaneously.
- Fed rate-hike expectations have cooled. US June PCE data weakened, and July ADP private-sector employment, released this week, rose by only 44,000, hitting a new low for the year. Market expectations of a Fed rate hike in September have notably receded. For gold, which generates no interest income, easing rate-hike expectations mean a lower opportunity cost of holding it.
- The dollar index has weakened. Recent joint US-Japan intervention in the foreign exchange market has led to market estimates that Japanese authorities sold a considerable amount of dollar assets to support the yen. The dollar index fell to near six-week lows, providing direct support to dollar-denominated gold.
Improving fund flows: Gold ETF inflows confirm sentiment repair
In addition to macro tailwinds, the fund flow situation in the gold market itself is also undergoing positive changes. Analysts noted that the previously pessimistic pricing of gold is being gradually repaired, and gold ETF funds have begun to post continuous net inflows, driving rapid price gains. In previous months, as gold prices pulled back sharply from the record set at the end of January, some trend-following funds chose to exit. Now, with negative factors gradually clearing, bargain hunters and allocation-type funds are re-entering the market, and market sentiment has shifted from "panic" to "repair".
However, it must be recognized clearly that despite the sharp rebound this week, current prices remain more than 20% below the historical peak of $5,589 per ounce recorded at the end of January. Whether this rally represents a "oversold bounce" or a "trend reversal" remains disputed in the market. From a technical perspective, the $4,300 level is both a round figure and a previous high-volume trading zone; whether prices can firmly hold above it will become the short-term bull-bear dividing line.
Outlook: Short-term strength, trend needs confirmation
Looking ahead, Qu Rui believes that gold prices still have room to rise in the short term, but subsequent movements will heavily depend on verification by geopolitical risk changes, fundamental data, and policy signals. From a macro perspective, the Fed's policy stance of "higher rates for longer" has not fundamentally reversed; the market has merely delayed the timing of rate hikes and has not priced in a full easing cycle. Real interest rates are likely to remain elevated and volatile, and gold still lacks core support for a sustained upward trend.
For investors, the signal sent by the central bank's 21 consecutive months of gold purchases deserves thought: appropriately allocating gold in an asset portfolio is both a defensive move against macro uncertainty and a strategic choice to share in the diversification process of the global monetary system. However, chasing highs in the short term still requires caution against volatility risk. The upcoming US non-farm payroll data this week, the latest developments in the Middle East situation, and subsequent remarks by Fed officials could all become the "winning moves" determining the short-term direction of gold prices.
(This article is compiled and analyzed based on public information and does not constitute investment advice. The precious metals market is highly volatile, and investors should make prudent decisions based on their own risk tolerance.)
