China Eyes Custodian Role for Foreign Central Banks as Gold Nears Record Highs – 27/9/2025

China is reportedly courting foreign central banks to store gold in Shanghai vaults, aiming to expand its influence in global bullion markets as demand surges and prices hover near record highs.

According to Bloomberg, the People’s Bank of China has used the Shanghai Gold Exchange in recent months to pitch central banks in friendly countries on storing reserves within China. At least one Southeast Asian nation has shown interest, people familiar with the matter told Bloomberg.

The initiative would strengthen Beijing’s position as a bullion hub and reduce reliance on Western financial centers. Custodian services are central to this strategy, attracting more trading activity and enhancing market credibility.

Gold analyst Jan Nieuwenhuijs noted on X that foreign central banks have technically been able to store gold in Shanghai since 2014, though adoption has been limited. He added that one Southeast Asian country, possibly connected to the mBridge cross-border payments project, may be evaluating the option.

The push comes amid strong central bank demand that has fueled a powerful rally in bullion. Spot gold reached $3,784.74 an ounce in New York on Monday, setting a fresh record before easing slightly. MarketWatch reported that gold closed last week at $3,789.80, up 43.6% year-to-date — outpacing Bitcoin’s 17% gain, the S&P 500’s 12.96% rise, and the Nasdaq Composite’s 16.43% increase.

Analysts say gold’s bullish momentum may continue despite overbought conditions. Chris Mancini, co-portfolio manager at Gabelli Funds, noted that investors are increasingly turning to gold as a hedge against inflation and a dollar alternative.

However, China faces competition from established bullion markets such as London, whose vaults hold more than 5,000 tons of global reserves. The World Gold Council ranks China fifth among central bank gold holders, though its domestic market for jewelry, bars, and coins remains the world’s largest.