China\u2019s 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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
The article was produced using an AI tool and checked by an editor.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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