Barclays Metals & Mining: Mined Matters – Central bank gold buying continues

Research evidence excerpt

Barclays Metals & Mining: Mined Matters – Central bank gold buying continues

Barclays | Barclays Metals & Mining

Top news flow

China/Global

• Liquidity conditions in China’s money market are tightening, with the overnight interbank

rate set to rise for a fifth consecutive week and the seven-day rate hitting a three month high.

Higher funding costs have pushed the 10-year government bond yield above 1.7% and

triggered an unwind in leveraged positions, with overnight repo volumes falling nearly 50%

from a record 8.5 trn yuan in April. The tightening reflects seasonal factors such as tax

payments and regulatory checks, alongside PBOC guidance to curb interbank lending. Bond

fund redemptions have also accelerated, with outflow indicators reaching the highest level

this year. Funding conditions are expected to remain under pressure into quarter end.

• China is preparing to invest around 2trn yuan ($295bn) over 5 years to build a nationwide

network of data centres to support AI development. The plan, led by agencies including the

NDRC, aims to link computing hubs and rely on domestic suppliers such as Huawei for at

least 80% of technology, reducing dependence on Nvidia and AMD. The network is targeted

for completion by 2028 and may be funded via sovereign bonds, state funds and private

capital, with potential total investment of at least 5trn yuan including power infrastructure.

The initiative forms part of the “Six Networks” programme and underpins Beijing’s broader

push to scale AI adoption across sectors.

• China’s PBOC increased gold reserves by 9.95t in May, marking a 19th consecutive monthly

purchase, with total holdings reaching 74.96moz (2331.52t). Foreign exchange reserves rose

by $31.7bn to $3.4422trn, the highest since November 2015. China’s trade remained strong,