China’s central bank has kept buying gold for 15 straight months, even as the entire precious metals market took a nosedive at the end of January.
The People’s Bank of China added 40,000 troy ounces to its reserves in January. That’s the latest addition since it started its buying streak back in November 2024.
While China kept loading up, the rest of the market got crushed. Gold and silver hit record highs in January after waves of speculative bets pushed prices up too fast. Then everything fell apart. On January 30, gold dropped 10% in a single day.
Silver fell even harder, down 16%. Copper also got slammed, dropping 5.7% during the same session. That morning was one of the worst for metals in years. Prices have tried to bounce back, but the entire market is still shaky.
US hedge funds cut positions as traders get wiped out
As the crash unfolded, speculators ran for the exit. Hedge funds and big traders dumped gold fast. Bullish positions were cut by 23% in just one week.
That left net-long positions at 93,438 contracts, the lowest in over three months, based on U.S. trading data through February 3. That was the biggest drop since October.
While traders were dumping gold, central banks were still stacking. Global official purchases reached over 860 tons in 2025. That’s down from the 1,000-ton pace seen in each of the last three years, but it’s still a heavy total.
The World Gold Council expects more steady buying this year, with China clearly leading the charge.
Back on the mainland, things weren’t much calmer. Gold-backed ETFs in China saw their worst day ever for withdrawals.
On Tuesday, the four biggest ETFs (Huaan Yifu, Bosera, E Fund, and Guotai) lost about 6.8 billion yuan, which is close to $980 million. It was their second day in a row of big outflows, right after taking in record inflows earlier that same week.
As retail buyers panicked, Chinese banks started putting new rules in place. On Friday, China Construction Bank said it would raise the minimum deposit on its gold savings accounts starting Monday. The bank also told customers to be more careful and think about risk before throwing money at gold.
At the same time, Industrial and Commercial Bank of China rolled out quota limits for its Ruyi Gold Savings program, especially during the upcoming Lunar New Year holidays.
Exchanges are also stepping in, introducing new limits and restrictions aimed at cooling off the wild price swings across metal markets, not just in gold.
Still, there’s no real panic yet. In Shuibei, a major silver trading hub, dealers said more people were selling than buying over the weekend, but not in a panic. Prices for silver there are still trading above the official exchange levels, which means there’s still demand.
