A teller counts U.S. dollar bills at a bank in Qionghai, south China's Hainan Province.Photo:Xinhua

China's foreign exchange (forex) reserves reached $3.3174 trillion as of the end of June, up by $32.2 billion from May, a 0.98 percent increase month-on-month, official data showed. It was the 19th consecutive month that China's forex reserves surpassed the $3.2 trillion mark, and the sixth consecutive month-on-month increase. Meanwhile, China's central bank continued to increase its gold holdings for the eighth consecutive month.
 
In June, influenced by macroeconomic policies and economic growth prospects in major economies, the US Dollar Index fell, and global financial asset prices generally rose, said the State Administration of Foreign Exchange (SAFE) in a statement published on Monday. 
 
Combined with exchange rate conversions and asset price changes, these factors led to an increase in forex reserves in June. China's sustained and robust economic growth, maintaining strong momentum, supports the basic stability of its foreign exchange reserves, according to the SAFE.

Market concerns over US fiscal and monetary policies and the politicization of the US dollar have intensified, undermining the credibility of the US dollar, Wen Bin, chief economist at China Minsheng Bank, told the Global Times on Monday.

"In June, the US Dollar Index fell 2.5 percent to a three-year low of 96.9. Non-US currencies appreciated collectively. As forex reserves are denominated in US dollars, the appreciation of non-US currencies boosted the scale of reserves after exchange rate conversion," said Wen.

The global environment is increasingly complex and challenging, with weakening economic momentum and persistent volatility in international financial markets, Wen noted. 

"However, China's sustained and robust economic growth, resilient foreign trade, and global investors' optimism about new opportunities in China's capital markets all contribute to maintaining the basic stability of forex reserves," said Wen.

China also increased its gold holdings. The People's Bank of China (PBC), the country's central bank, has increased its gold holdings for eight consecutive months, according to data released on Monday. 

China's gold reserves stood at 73.9 million ounces (about 2,298.55 tons) at the end of June, an increase of 70,000 ounces (about 2.18 tons) compared with May. The reserves stood at 73.83 million ounces at the end of May, PBC data showed.
 
Central banks around the world have gone on a "gold purchase craze" this year.

In the first quarter, global central banks purchased 244 tons of gold. Central banks have accumulated more than 1,000 tons of gold in each of the past three years, up significantly from the 400-500 tons average over the preceding decade, according to the Central Bank Gold Reserves Survey published by the World Gold Council on June 17.

This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty, which has clouded the outlook for reserve managers and investors alike, read the survey report.

Some analysts noted that gold prices are primarily supported by volatile US policies, which are eroding investor confidence in US assets and boosting gold's status as a safe haven.

Analysts also said that if the final US tariff statement, which will reportedly be delivered to US trade partners from Monday (US time), indicates an intensification of trade tensions, gold may further attract purchasing interest. 

Gold tends to perform well during periods of economic uncertainty and geopolitical tension, which lifted spot gold to a record high of $3,500.05 an ounce in late April, according to Reuters.

On July 1, HSBC raised its 2025 average gold price forecast to $3,215 an ounce from $3,015 and its 2026 forecast to $3,125 from $2,915. 

Global Times