In November 2024, the world was stunned by China’s announcement of the discovery of one of the largest gold reserves in history, located in Pingjiang County, Hunan Province. This deposit, estimated to be worth a staggering $83 billion, spans more than 40 gold veins at depths of up to 3 kilometers, and could significantly reshape the global gold market. While the discovery itself is a monumental achievement, it raises important questions about whether China’s recent actions in the gold market were part of a calculated strategy to manipulate prices and maximize the value of its reserves before making such an announcement.
For nearly two years leading up to the gold discovery announcement, the People’s Bank of China (PBOC) had been on an unprecedented gold-buying spree. This aggressive accumulation coincided with a period of rising gold prices, which were largely driven by global economic uncertainty, geopolitical tensions, and the weakening of the Chinese yuan.
Despite this continuous accumulation, China’s gold-buying strategy took a sudden shift in April 2024, when the PBOC’s gold purchases dropped sharply to just 60,000 troy ounces, a notable decrease from 160,000 ounces in March and 390,000 ounces in February. By May, this slowdown turned into a full pause, as China’s gold reserves remained unchanged from the previous month. For an institution that had consistently been the largest gold buyer, this pause raised eyebrows. What was behind this sudden shift?
The timing of this decision is significant, as gold prices had already surged to near-record levels by the spring of 2024. This brief hiatus in gold purchases was a pivotal moment that many analysts believe was part of a larger strategy to allow gold prices to soften. By halting purchases at a time when prices were peaking, China seemingly set the stage for a more favorable purchasing environment down the line, without driving up the price further.
China's decision to pause its gold purchases had immediate consequences for the global gold market. Gold prices, which had reached a high of nearly $2,450 per ounce in May 2024, began to pull back as the PBOC stopped buying. This market shift was not only a result of the pause in purchases but also reflected a broader cooling of demand from Chinese retail investors, who had been buying gold in large quantities as a hedge against the country’s economic uncertainties and a weak yuan.
By allowing gold prices to dip from record highs, China might have been positioning itself for a better entry point when it decides to resume buying, or at least when it officially announces the vast reserves it has recently discovered. This strategic market tampering likely reduced the price volatility in the short term, but it also primed the market for a major announcement that could cause a surge in gold prices once the discovery was revealed.
In November 2024, the Chinese government revealed the Wangu Goldfield, one of the world’s largest untapped gold reserves, located in Pingjiang County. The announcement highlighted the discovery of more than 1,000 metric tons of gold, worth around $83 billion. This discovery is set to increase China’s gold reserves by more than 30%, reinforcing its economic power and its role as a dominant player in the global gold market.
The timing of this revelation, coming just after China had paused its gold-buying spree, raises important questions. Was this discovery meant to coincide with China’s strategic pause to maximize the impact of the news? By allowing prices to soften and market conditions to stabilize, China had effectively prepared the ground for this announcement. The sudden surge in global interest and speculation surrounding the new discovery could drive gold prices up once again, benefiting China’s vast reserves at a time when it is poised to control even more of the precious metal.
This discovery not only strengthens China’s physical gold reserves but also sends a powerful geopolitical message. It reinforces China’s growing economic dominance, particularly as the country seeks to position itself as a leading global power amid a shifting international order. The move comes at a time when gold is increasingly viewed as a safe haven amid global economic uncertainty, and China’s stockpiling of gold has positioned it to benefit greatly from any future volatility.
The revelation of such a massive gold discovery will have far-reaching effects on the global gold market. China’s gold reserves, which now stand to grow by 1,000 tons, represent an enormous share of the global supply. While this reserve will not be mined and released into the market immediately, the announcement will undoubtedly cause shifts in investor sentiment and market dynamics.
First, China’s central bank, having paused its gold purchases at peak prices, now holds a substantial portion of the world’s gold in reserve, which could allow it to exercise greater control over global supply and demand. The discovery could also put additional pressure on other central banks, particularly those in the West, to reconsider their own gold reserves as a hedge against inflation and economic instability.
Moreover, the discovery could affect global retail demand for gold. China’s domestic gold market has already shown signs of slowing down, with a 4.6% decline in gold imports from Hong Kong in October 2024. As gold prices stabilize, demand from Chinese consumers, particularly for gold jewelry, may remain subdued. However, investment-grade gold, such as bars and coins, continues to see strong demand, especially as gold prices become more attractive following the recent pullback.
The global gold market will likely react with volatility as investors digest the news and recalibrate their expectations. The fact that China is not only a major buyer but now has one of the largest gold reserves in the world could lead to a shift in the pricing dynamics of the yellow metal. As China continues to hold this vast stockpile, it may limit the amount of gold available for other markets, putting upward pressure on prices over time.
China’s handling of the global gold market leading up to the November 2024 announcement of its vast new gold reserves demonstrates a remarkable level of strategic foresight. By pausing its purchases at a time when gold prices were at their peak, China allowed the market to cool, positioning itself to benefit from both the discovery of an enormous new goldfield and the ensuing market reaction.
While China’s actions may have created opportunities for its own economic gain, they also raise broader questions about market manipulation and transparency in the global gold market. The full impact of this strategic move will unfold over the coming years as China’s gold reserves grow and its influence over the market expands. For now, one thing is clear: China is no longer just a passive participant in the gold market, it is a dominant force, carefully orchestrating its moves for maximum economic and geopolitical advantage.