The Express Speed of Gold: China’s Major Role in the Surge – Know Everything

Gold Latest Price increase Reason: Gold continues to break new records without interruption. After touching the historic level of ₹1 lakh per 10 grams, it is currently trading at around ₹95,000–96,000 (as of April 23).

So far in 2025, gold prices have surged by more than 26%. Like any other commodity, the price of gold typically depends on global events. When global economic growth slows, prices usually rise, and when the dollar strengthens, prices tend to fall. However, in the current scenario, gold prices are defying all conventional assumptions, and it is now believed that these prices are being driven less by economic reasons and more by the activities of Chinese buyers and investors.

Heavy Investment in Gold

According to the World Gold Council, central banks around the world are investing in gold, and as a result, the gold boom could intensify in the coming years. Among these purchases, the most significant and surprising is the aggressive buying by China.

As of March 2025, China’s gold reserves stood at 2,292 tonnes, accounting for 6.5% of the world’s total gold reserves. Due to a weakening dollar and a surge in gold prices, the value of China’s gold reserves has increased by 20%, reaching $230 trillion. It is also worth noting that after Switzerland, China is the world’s second-largest importer of gold, and with an annual production of 375 tonnes, it is also the top producer of gold. Russia follows in second place with 325 tonnes.

The Largest Buyer

In recent months, China has surpassed all other central banks in gold purchases, becoming the world’s largest buyer of gold, overtaking even India. Interestingly, it’s not just the Chinese central bank that is aggressively investing in gold, but ordinary Chinese citizens as well.

This new trend has seen young Chinese consumers buying small gold pieces weighing as little as one gram, contributing to the country’s massive surge in demand.

What’s the Reason?

Whether it’s an individual or a central bank, the primary reason for buying gold is usually to create a protective shield during times of instability.

Still, the question remains: why is China buying significantly more gold than any other central bank? Analysts believe China aims to reduce its dependency on the U.S. dollar and promote the international use of its own currency, the yuan. Currently, the dominance of the U.S. dollar is largely underpinned by America’s vast gold reserves.

The Chinese government controls the inflow of gold into the country through an import quota system. It is reported that the government has increased the quota for banks to meet the growing demand for gold.

At present, there seems to be no sign of China slowing down its gold purchases. As a result, it’s hard to predict just how high the price of gold will go, especially given that the strength of the dollar does not appear to be returning any time soon.