Chinese insurance companies join gold rush as prices hit record highs

Ten of China’s largest insurance companies began investing in gold on Monday as the government launched a pilot program allowing select insurers to allocate funds to the precious metal.

Under the new regulations, these insurers can allocate up to 1% of their assets to gold bullion. According to a research note by Chinese investment bank Minsheng Securities Co., this could translate into potential investments worth 200 billion yuan ($27.4 billion), raising expectations to further drive global demand for gold.

This initiative also marks a significant shift in China’s investment policies, making gold the first commodity explicitly permitted for insurance firms. Previously, China restricted insurance funds from investing in assets without “stable cash returns” and imposed limits on their holdings in bonds and equities.

Chinese gold efforts ignite a ‘reserve’ rush

The Chinese National Financial Regulatory Administration (NFRA) announced on Feb. 7 that the program aims to help insurers optimize their medium- to long-term asset allocations and improve asset-liability management.

Under the pilot scheme, the designated insurers can invest in gold through spot contracts traded on the Shanghai Gold Exchange (SGE). This includes deferred payments, centralized pricing, inquiry-based transactions, swap contracts, and gold leasing agreements.

China has significantly increased its gold reserves since resuming acquisitions in November 2024 after a six-month pause, following Donald Trump’s victory in the U.S. According to the Chinese central bank, gold holdings rose from 72.8 million ounces in October to 73.29 million ounces by December, with an estimated 15 metric tons purchased during this period.

This surge has been aligning with a broader global trend of central banks bolstering gold reserves as a hedge against the U.S. dollar, particularly after Trump tariffs.