China's Central Bank Boosts Gold Reserves Amid Market Sentiment Shift

Gold prices surged in August, but momentum eased in early September. The LBMA Gold Price PM and Shanghai benchmark Gold Price PM (SHAUPM) both recorded notable gains. Chinese gold ETFs saw an increase in total asset under management and collective holdings.

The People's Bank of China reported a 20t gold purchase in August, the highest since October 2023. This was likely driven by improved market sentiment and increased activity in gold futures. However, gold withdrawals from the Shanghai Gold Exchange fell unseasonally last month, indicating cooling bullion demand and ongoing weakness in the jewellery sector.

The rally in gold prices led to stronger activity in gold futures. Chinese gold ETFs continued to see inflows in early September, with total asset under management rising further.