China’s central bank (PBoC) added to its gold reserves in April after a temporary price dip. The purchase extended its buying run to 18 consecutive months, with 8.1 tonnes added, the largest monthly increase since December 2024.
Central banks and other public institutions bought nearly 245 tonnes of gold in Q1, according to the World Gold Council (WGC). This total was 3% higher than a year earlier and slightly above the five-year average.
Central Bank Gold Buying Momentum
Poland and Uzbekistan made the largest Q1 additions, buying 31 tonnes and 25 tonnes respectively. China accounted for 7 tonnes in Q1, with the total expected to rise in the current quarter.
The article was produced using an AI tool and checked by an editor.
We are seeing a clear signal from China’s central bank, which used the April price dip to increase its gold reserves. This purchase was its largest since December 2024 and extends a consistent buying streak to 18 months. This behavior suggests a strong belief in gold’s long-term value among official institutions.
This trend isn’t limited to one country, as central banks globally added nearly 245 tons in the first quarter, slightly above the five-year average. We’ve seen this pattern before; looking back at the period from 2022 to 2024, aggressive central bank accumulation helped gold break previous records despite a strong US dollar. With China’s buying expected to increase this quarter, this institutional demand provides a solid foundation for prices.
Trade Setups And Risk Management
For traders, this persistent buying creates a potential price floor, making significant downside moves less likely in the coming weeks. With the Cboe Gold Volatility Index (GVZ) having receded to 20.5 from its April highs, long-dated call options for July and August expirations appear more attractively priced. Establishing bullish call spreads could be a cost-effective way to position for a gradual move back towards the year’s highs.
Given the steady demand, traders should consider selling out-of-the-money put options to collect premium. The recent dip to the $2,300 level in late April was quickly bought, indicating strong support that aligns with this central bank activity. This strategy profits from both a rising price and sideways consolidation, capitalizing on the view that a major sell-off is unlikely.
This strong official demand is occurring even as recent inflation data from the US Bureau of Labor Statistics showed a stubborn 3.6% annual CPI for April, suggesting the Federal Reserve may hold interest rates steady. Historically, such a monetary policy stance would be a headwind for gold. However, the persistent central bank buying is acting as a powerful countervailing force, which we must factor into our strategies.
