China's central bank increased its gold reserves for a 23rd consecutive month in September, according to official data released on October 7, as the country continues to build up its holdings of the metal.

Gold reserves stood at 77.47 million ounces at the end of September, up 740,000 ounces from a month earlier, the central bank data showed.

Yu Mengguo, general manager of Jinpeng Futures, said the sustained accumulation reflects a strategic reserve allocation approach.

"Gold currently accounts for about 8.5% of China's official reserves, well below the global central bank average of around 27%, leaving room to add more," Yu said. He added that gold serves as an important tool to hedge against fluctuations in dollar-denominated assets and geopolitical risks, and that it also meets risk management needs, noting that gold has low correlation with stocks and bonds, can optimize the foreign exchange reserve portfolio, enhance sovereign credit, and support the internationalization of the renminbi.

Wu Zewei, a special researcher at Sushang Bank, said the 23-month buying streak reflects a long-term, stable approach to reserve asset allocation, and that continued purchases can optimize the structure of foreign exchange reserves and reduce risks from volatility in single foreign currency assets.

Wang Qing, chief macro analyst at Orient Finance, said the Federal Reserve's resumption of interest rate hikes in September, a renewed sharp drop in international gold prices, and mounting market concerns about the fiscal sustainability of developed economies such as the United States, Europe and Japan may be the direct reasons behind the central bank's accelerated purchases in September.

Wang added that the fundamental reason for the continued buying is new changes in the global political and economic landscape, which means that even though gold prices remain elevated, the need to increase holdings has risen from the perspective of optimizing the international reserve structure.

Citing Orient Finance data, Wang said gold accounted for about 8.5% of China's official international reserves, which are mainly composed of foreign exchange reserves and gold reserves, as of the end of September 2026. In contrast, European Central Bank data released on June 2 showed gold made up 27% of global central banks' total reserve assets at the end of 2025, up from 20% a year earlier.

"China's gold reserve ratio is clearly low and there is still substantial room to increase holdings later," Wang said.

Wang also noted that gold is a widely accepted final means of payment, and that central bank purchases can enhance sovereign currency credit and create favorable conditions for steadily advancing renminbi internationalization. He expects continued gold purchases to remain the general direction in the future.

The central bank has stepped up its gold buying this year: it added 40,000 ounces in January, 640,000 ounces in July, 650,000 ounces in August and 740,000 ounces in September.

Wu said the gradual increase in monthly purchases shows the central bank is steadily adding to its allocation in step with market conditions and will not change its medium- to long-term direction because of short-term gold price moves. Sustained buying will also provide bottom support for international gold prices.

On the outlook for gold prices in the fourth quarter, Yu said prices are expected to show wide-range swings at high levels with a stronger bias, and that a one-way surge is unlikely.

Yu explained that the main factor weighing on gold is the Federal Reserve's monetary environment, noting that the United States resumed rate hikes in September. If tightening continues, U.S. Treasury yields and the dollar will remain high, pressuring gold as a non-yielding asset; if inflation rebounds or employment beats expectations, expectations for rate hikes will be repriced and gold prices could pull back in the short term.

Conversely, Yu said there are also factors supporting gold prices: continued central bank buying, with China adding for 23 straight months and global central bank purchases also at high levels; ongoing geopolitical risks and concerns about dollar credit; and support from physical demand during holidays and the overseas consumption peak season in the fourth quarter.

Wu held a similar view, saying gold prices are likely to remain in a wide trading range in the fourth quarter as bulls and bears continue to battle. The core influences are changes in expectations for Federal Reserve policy and fluctuations in real U.S. Treasury yields and the dollar index, he said, adding that overseas employment and inflation data will keep shifting market views on the timing of rate cuts and drive periodic adjustments in gold prices. However, changes in the global geopolitical situation will bring intermittent safe-haven buying, and continued global central bank purchases can provide bottom support, though they are unlikely to push prices steadily higher on their own, Wu said.

Data from the World Gold Council showed global central banks bought 289 tons of gold on a net basis in the second quarter, up 62% year on year.

Wu also reminded investors to watch for short-term sharp volatility driven by changes in overseas market liquidity and not to judge the market's direction based on a single positive factor.