China Seeks to Become Global Gold Custodian as Prices Hit Record Highs

TLDR

• China pushes for gold storage by central banks as prices surge to new highs.
• Shanghai Gold Exchange sees growing interest from Southeast Asia amid gold rally.
• Central banks boost gold purchases, with China aiming for greater influence.
• China competes with London to become top custodian for global gold reserves.

As gold prices reach new all-time highs, China is reportedly seeking to position itself as a key custodian for global gold reserves. The People’s Bank of China (PBOC) is reportedly targeting central banks from friendly nations, aiming to bolster Shanghai’s role in the global gold market. This shift comes as central bank demand for gold surges, driven by economic uncertainty and concerns over the dominance of the U.S. dollar.

China’s Strategy to Gain Global Custodian Role

The Shanghai Gold Exchange has been a platform for foreign central banks to store gold since 2014. However, interest in this option has been limited until recently. Bloomberg reports that the PBOC is now actively courting central banks, particularly from Southeast Asia, to store their gold reserves in Shanghai.

This push is part of China’s broader strategy to reduce dependence on Western financial centers, especially those in London, which currently dominate the global gold market.

China’s efforts to establish Shanghai as a key hub for gold storage could further solidify its position in global finance. With increased global demand for gold, particularly from central banks, China sees this as an opportunity to strengthen its financial infrastructure and attract more trading activity.

Record Gold Prices and Rising Central Bank Demand

Gold prices have reached unprecedented levels in recent months, driven by growing central bank demand. As of late September 2025, spot gold prices surged to nearly $3,785 per ounce, setting new records.

Analysts attribute the rise to several factors, including inflation concerns, economic instability, and a shift away from the U.S. Treasurys. In particular, gold is seen as an alternative investment, offering a hedge against currency and market volatility.

This rally in gold prices is providing additional momentum for China’s push. Central banks are increasingly turning to gold as part of their diversification strategies. In fact, the World Gold Council reports that global central bank purchases of gold have been on the rise, further fueling demand.

Competition from Established Gold Hubs

While China’s domestic gold market is the largest in the world, it faces stiff competition from well-established markets, particularly London. London currently holds more than 5,000 tons of gold reserves, making it the world’s leading custodian for gold. Despite this, China’s ambitions are clear: it aims to challenge London’s dominance in the global bullion market.

Although the Shanghai Gold Exchange has been in operation for over a decade, foreign central banks have not widely embraced the option to store their gold in China. Analysts suggest that trust and credibility remain key challenges for the PBOC. London’s long-standing reputation and infrastructure are difficult to rival, even as China expands its efforts.

Potential Interest from Southeast Asia and mBridge

One of the key factors driving interest in China’s gold custodial services is the mBridge cross-border payments project. Reports suggest that at least one Southeast Asian country may be considering the option to store gold in Shanghai, potentially linked to this initiative. mBridge is a multilateral project that aims to facilitate digital currency use and cross-border payments in Asia.

The increased interest from Southeast Asia could be a sign of shifting global financial dynamics. As more countries look to reduce their reliance on the U.S. dollar, China’s role in the gold market may become more central. However, it remains to be seen whether this will lead to a significant shift in global gold storage patterns.

In the face of rising demand and competition, China is taking strategic steps to position itself as a major player in the global gold market. The outcome of these efforts will depend largely on how effectively the PBOC can build trust and infrastructure to support the storage needs of foreign central banks.

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