China’s PBOC Keeps Up Gold-Buying Spree as Iran War Dents Prices

China’s central bank scooped up more gold for its reserves in March, demonstrating that a key pillar of support for the precious metal remains intact even as prices come under pressure amid the Iran war.

Bullion held by the People’s Bank of China rose by 160,000 troy ounces last month, according to data on Tuesday, marking a 17th month of purchases. The Asian nation’s central bank is among the largest gold buyers in the world.

Gold prices sank 12% in March — the worst monthly performance since 2008 — as the conflict that ripped across the Middle East boosted the US dollar and spurred bets that the Federal Reserve wouldn’t be able to cut interest rates if inflation picked up. That combination weighed on bullion, which also faced pressure from some investors selling the commodity to cover losses elsewhere.

The PBOC’s latest round of purchases may help to bolster investor confidence in gold, at a time when some other central banks have turned to sales. In March, Turkey’s central bank about 60 tons, worth more than $8 billion, to defend the lira.

Still, central-bank purchases have been a key feature of the market, picking up after Russia’s invasion of Ukraine in 2022 and contributing to a multi-year bull run. Many emerging-market economies have increased allocations to bullion as a hedge against US dollar-denominated assets.

In the first two months of the year, central banks bought a net 25 tons of gold, according to from the World Gold Council last week. The National Bank of Poland picked up 20 tons in February, driving much of the buying.