Increasing gold holdings remains a long-term strategic direction for China's central bank as it works to optimize the composition of its international reserves, while the fundamental drivers supporting a long-term rise in gold prices remain intact, experts said.

China's gold reserves stood at 74.15 million ounces as of the end of December 2025, up 30,000 ounces from the previous month, with the increase matching that of the prior month. This marked the 14th consecutive month of gold purchases by the People's Bank of China, the country's central bank, according to official data released on Wednesday.

The PBOC's continued modest gold purchases amid sustained rises and repeated record highs in gold prices highlight efforts to optimize the composition of its international reserves, said Wang Qing, chief macro analyst at Orient Golden Credit Rating International.

From the perspective of improving the structure of international reserves, steadily and prudently advancing the internationalization of the renminbi, and responding to changes in the global environment, increasing gold holdings remains a long-term strategic direction for China's central bank, Wang said.

Wen Bin, chief economist at China Minsheng Bank, said the fundamental logic supporting a long-term rise in gold prices remains intact. On the one hand, intensifying geopolitical conflicts and major-power rivalry have further weakened market confidence in the creditworthiness of the US dollar. On the other hand, amid the trend of "de-dollarization", central banks around the world continue to optimize their foreign exchange reserve structures by increasing gold holdings, Wen said.

The US Federal Reserve cut interest rates as expected in December. Coupled with setbacks in prospects for a Russia-Ukraine ceasefire and escalating tensions between the United States and Venezuela, London spot gold prices rose 2.36 percent during the month. On Dec 29, London spot gold prices hit an intraday high of $4,550.52 per ounce, setting a record.

Since the beginning of 2026, gold prices have continued to trend upward amid volatility. London spot gold prices once again broke above $4,500 per ounce intraday on Wednesday, and closed at $4,477.83 per ounce on Thursday, according to data compiled by market tracker Wind Info.

Ming Ming, chief economist at CITIC Securities, said there is a high degree of certainty that gold prices will continue to rise. He cited two main reasons: the combination of accommodative US monetary policy and expansionary fiscal policy, and policies of the Donald Trump administration that have intensified stagflationary pressures in the United States.

Analysts at CITIC Securities said in a recent report that compared with 2025, they expect greater certainty in China-US economic and trade relations in 2026. As a result, one of the key drivers of gold price gains last year — uncertainty surrounding US economic and trade policy and rising trade barriers — may have a limited impact in 2026.

However, whether it concerns China-US economic and trade relations, or the situation in geopolitical hotspots, significant improvement is unlikely to materialize in 2026. Global central banks are expected to maintain strong gold-buying momentum throughout the year, the analysts said.

As gold prices continue to climb and volatility intensifies, some banks have raised risk assessment requirements for gold investment products in an effort to protect investors.

Industrial and Commercial Bank of China, the country's largest State-owned commercial lender, recently announced that starting Jan 12, individual clients opening accounts for accumulated gold investment products, making active contributions, or adding regular investment plans, must undergo a risk tolerance assessment using the bank's standardized questionnaire, and obtain a balanced or higher rating. Some other banks have also introduced similar requirements.

At the same time, a number of banks have rolled out structured deposit products linked to gold or gold mining companies, with varying maturities and minimum investment amounts.

Experts said allocating gold to a portfolio can help mitigate risks and enhance overall portfolio resilience, but investors should fully understand the risk characteristics of gold-related products and ensure these align with their own risk tolerance.