The latest data from the State Administration of Foreign Exchange shows that China's foreign exchange reserves stood at $3,240.7 billion at the end of March, an increase of $13.4 billion from the end of February, marking the second consecutive monthly increase this year. Experts told Cailian Press that the US dollar index fell by 3.2% in March, and factors such as exchange rate translation and changes in asset prices contributed to the increase in China's foreign exchange reserves compared to the previous month.
In addition, the latest data also shows that the PBOC has been increasing its gold holdings for five consecutive months, with gold reserves reaching 73.7 million ounces by the end of March. Industry analysts told Cailian Press that the central bank's continued increase in gold holdings remains a major trend. Recently, spot gold prices have consolidated after breaking through $3,000, and analysts also told Cailian Press that the large fluctuations in gold prices reflect market anxiety. While gold prices are supported by multiple factors, the possibility of a pullback should also be noted.
Foreign exchange reserves increased by $13.4 billion in March.
Data from the State Administration of Foreign Exchange shows that as of the end of March, China's foreign exchange reserves stood at $3,240.7 billion, an increase of $13.4 billion from the end of February, a rise of 0.42%.
Wen Bin, chief economist at China Minsheng Bank, told Cailian Press that in March, influenced by macroeconomic data, fiscal and monetary policies, and expectations of major economies, the US dollar index fell, and global financial asset prices showed mixed performance. Under the combined effects of exchange rate translation and changes in asset prices, China's foreign exchange reserves increased by $13.4 billion compared to the previous month.
Specifically, in terms of currencies, the US dollar index fell by 3.2% to 104.2, while non-US dollar currencies generally appreciated. In terms of assets, the dollar-denominated hedged global bond index fell by 0.4%, and the S&P 500 stock index fell by 5.8%.
"Currently, external instability and uncertainty have significantly increased, but China's economic foundation is stable, with many advantages and great potential. There are ample macro-control reserve tools and policy space, which are conducive to unleashing huge domestic demand potential. At the same time, with the diversification of China's foreign trade regions, the upgrading of trade structures, and the continuous improvement in the attractiveness of RMB assets to foreign investors, China's international balance of payments will remain stable, laying the foundation for the basic stability of foreign exchange reserves," Wen Bin also said.
The PBOC continues to increase gold holdings.
In terms of gold reserves, data shows that China's gold reserves stood at 73.7 million ounces at the end of March, compared to 73.61 million ounces at the end of February, marking the fifth consecutive month of increased gold reserves by the central bank.
Qu Rui, deputy director of the Research and Development Department at Oriental Jincheng, told Cailian Press that the PBOC has been increasing its gold holdings for five consecutive months, while international gold prices have risen significantly during the same period, indicating that the central bank's increase in gold holdings is not driven by cost control but more by optimizing the structure of international reserves. The future trend for the PBOC to increase gold holdings remains a major direction.
Recently, gold prices have shown significant fluctuations. On March 14 and 17, spot gold prices broke through $3,000 per ounce twice during the day; on April 3, spot gold approached $3,150 per ounce, hitting a record high; on April 7, spot gold fell below $3,000 per ounce but then turned positive during the day, reaching $3,040 per ounce around 9 a.m.
"This morning, gold prices showed significant fluctuations, reflecting market anxiety," Wang Yi, a gold investment analyst at Guohua, told Cailian Press. From a fundamentals perspective, the double-edged sword of trade wars and inflation is long-term bullish for gold. On one hand, US import costs rise under tariffs, highlighting gold's anti-inflation properties; on the other hand, geopolitical risk premiums indirectly benefit gold. However, there is also the possibility of a pullback recently, along with bearish factors such as a stronger US dollar and repeated US policy changes.
Qu Rui also said that in the medium to long term, the implementation of tariff policies does not mean that short-term benefits are exhausted. Future gold trends will still be driven by several factors:
"First, the uncertainty of Trump's tariffs will continue to ferment, and the strong market risk aversion will provide strong support for gold; second, the unexpected reciprocal tariffs will exacerbate concerns about the risk of 'stagflation' in the US in the medium to long term, and gold's anti-inflation properties will continue to push its prices higher; third, global central banks still have a strong willingness to allocate gold; fourth, global geopolitical risks remain significant, which will further increase market demand for risk aversion and support gold."
The World Gold Council believes that the breakthrough of gold prices above $3,000 is of great significance. "Although gold prices may fluctuate in the short term, the key factor determining the next step in gold's trend is whether the fundamentals can provide long-term support for its trend. Gold investment demand will continue to be supported by a combination of geopolitical and geo-economic uncertainty, rising inflation, expectations of interest rate cuts, and a weaker US dollar."
