China-fueled gold rush drives 24% surge in 2024: What’s next in 2025?

Since resuming gold acquisitions in November after a six-month hiatus, China has substantially increased its gold reserves in just two months, as central banks worldwide continue to boost their holdings as a hedge against the U.S. dollar.

After halting purchases from May until the U.S. elections, China resumed buying gold following Trump’s victory, drawing significant market attention.

China’s gold holdings, which stood at 72.8 million ounces in October, rose to 72.96 million ounces in November and 73.29 million ounces in December. Since November 2024, China has purchased an estimated 15 metric tons of gold, according to Chinese central bank reports.

The country is expected to continue its buying spree this month, with the World Gold Council set to release January’s data on Feb. 5.

All eyes on Fed as China’s gold rush grows

Spot gold prices, which surged 27% last year, continued their strong momentum into 2025, rising 5.2% in January to reach $2,786 per ounce with three trading days left in the month.

Geopolitical risks stemming from U.S. President Donald Trump’s aggressive foreign policy and China’s increased gold purchases have been key drivers of this rally.

Despite profit-taking pushing spot gold prices down to $2,730 per ounce earlier this week, the market opened near $2,760 on Jan. 29, ahead of the U.S. Federal Reserve’s critical interest rate decision.

On Jan. 27, the “DeepSeek shock” roiled global markets, triggering a flight from riskier assets and leading to panic selling in gold. Although gold briefly fell to $2,730, it recovered to trade around $2,760 ahead of the Fed’s decision.

While no rate cut is expected from the Fed today, Chair Jerome Powell’s remarks will be closely watched. The Fed previously signaled two rate hikes in 2025, reinforcing its commitment to tight monetary policy.

However, two economic data releases Tuesday fell short of expectations. The U.S. Conference Board Consumer Confidence Index dropped from 109.5 in December 2024 to 104.1 in January 2025, missing market forecasts of 105.7. Additionally, durable goods orders fell 2.2% last month to $276 billion, whereas analysts had anticipated a 0.6% increase.

These weaker-than-expected figures have softened expectations of a hawkish Fed stance, providing support for gold prices.

With Trump’s official return to office this month and his announcement of additional tariffs on China, Europe, Canada, and Mexico, concerns over escalating trade wars have intensified, reinforcing gold’s appeal as a safe-haven asset.

Further fueling gold prices are expectations of global interest rate cuts and ongoing geopolitical conflicts, including the Russia-Ukraine war.