The People’s Bank of China reported an increase in the country’s gold reserves for the fifth month, reaching $229.59 billion at the end of March, up from $208.64 billion at the end of February. Gold reserves totalled 73.70 million fine troy ounces, compared to 73.61 million ounces in the previous month.
Foreign exchange reserves were $3.241 trillion at the end of March, growing from $3.227 trillion at the end of February. Following this news, gold prices saw an uptick, reaching $3,050, reflecting a 0.50% increase in value for the day.
Gold Reserve Accumulation
The figure reported by the People’s Bank of China points to another month of sustained accumulation in precious metals, specifically gold. The reserve now stands at $229.59 billion in value, not just slightly but clearly up from the previous month’s $208.64 billion. It’s also visible in the physical volume held—73.70 million fine troy ounces versus 73.61 million. Although the increase is modest in terms of volume, it adds a layer of consistency to the accumulation we’ve been seeing month after month. This is the fifth such increase in a row, suggesting more than temporary diversification.
At the same time, we note that China’s foreign exchange reserves have edged higher by $14 billion, reaching $3.241 trillion by March’s close—an amount not seen since late last year. These reserve changes, taken alongside an uptick in global gold pricing, help set a clearer direction for the metal in the near term. With pricing hitting $3,050 per troy ounce and marking a 0.50% rise on the day, we’re already seeing a calculated reaction in the commodities market.
For those of us focused on the derivatives tied to precious metals, particularly gold futures and options, it’s worth interpreting this as more than passive foreign reserve management. When central banks move in patterns—especially those with the weight of China’s economy—their actions tend to nudge not only spot and futures pricing, but also volatility assumptions. A fifth month of accumulation narrows the uncertainties on demand from one of the world’s largest holders. That shifts our attention firmly onto supply constraints and macroeconomic pressures elsewhere.
Derivatives Market Implications
It’s not just about the volume of gold being added, but the frequency and persistence of the additions. The behavioural pattern has changed, and that changes the underpinnings of price movement. Any modelling approach based on single-month anomalies should be updated to reflect continued central bank accumulation behaviour.
While FX reserve data often slips past derivative traders who are focused on short-term catalysts, it would be a mistake to dismiss the $14 billion rise. The net inflows point to tighter capital account conditions and indicate a more active reserve strategy from policymakers.
From our perspective, the immediate action involves reviewing volatility premiums embedded in short-dated options. With gold prices near multi-year highs and showing stable upward movement, directional bets now carry clearer tail situations. Any declines are likely to meet stiff buying interest from multiple sides, which could mute implied volatility drops.
We are also evaluating the skew in precious metals contracts. The directional tilt seen in call demand over puts is starting to widen. This could mean larger institutional players are growing more comfortable holding upside exposure within a defined range. Those of us designing spreads would do well to account for that—short-dated strangles and ratio spreads may become less attractive if premium erosion accelerates under consistent demand.
It would be careless to ignore the geopolitical undertones of these reserve changes. While we avoid over-reading into individual monthly figures, consistent central bank positioning—particularly from a reserve-heavy state—creates a tailwind for gold positioning over the medium term.
In our strategies, we’re favouring variable hedging ratios using rolling futures adjustments rather than locking into outright directional plays. This allows some flexibility in response to unexpected changes in policy communication.
In sum, the central bank’s recent moves confirm gold’s growing utility as more than just a safe-haven—it’s being treated as a core strategic asset once again. For traders in the derivatives space, that sharpens the need for precision in short-term structure while maintaining longer-dated plays that lean into that momentum without overreaching.
