China's central bank keeps buying gold while India's imports collapse 81 percent: Asia's great gold split

Asia's two biggest gold markets are moving in opposite directions. In Beijing, the central bank is buying at its fastest pace in three years. In New Delhi, the government has made gold so expensive to import that purchases have collapsed. China's central bank added 21 tonnes of gold in September, its 23rd consecutive month of buying, according to Kitco, while India's gold imports fell 81.27 percent year on year in the same month.

The split matters far beyond the two countries. China and India have long been the twin pillars of global gold demand, and their choices shape prices for savers, jewellers and investors across Asia. With gold trading well below its January record but still historically high, the tug of war between official buying and falling consumer demand is defining the market.

China's steady accumulation

The People's Bank of China has been buying gold every month for nearly two years. September's 21 tonnes was its largest monthly purchase since September 2023, up from 18.5 tonnes in August and 18 tonnes in July, taking its reported reserves to 2,196 tonnes.

The motive is diversification. Like many central banks in emerging economies, China wants to reduce its reliance on the US dollar and other reserve currencies, particularly at a time of geopolitical tension and sanctions risk. Gold is a reserve asset that no other government controls, which makes it attractive to countries seeking financial independence.

Central bank buying has become one of the most important supports for gold prices in recent years. When official buyers keep adding steadily, they provide a floor under the market even when private demand weakens.

India slams on the brakes

India is moving the opposite way, by design. The government raised the import duty on precious metals from 6 percent to 15 percent, effective 13 May 2026, and Prime Minister Narendra Modi urged people to defer gold purchases amid the crisis in West Asia, as reported by Kotak Neo. The result was dramatic: September imports fell 81.27 percent year on year to 1.8 billion dollars, with silver imports down 49.11 percent.

The reason is the currency and the trade balance. India imports almost all of its gold, and high oil prices linked to the Middle East conflict have already strained its import bill. Every dollar spent on gold is a dollar that leaves the country, weighing on the rupee and foreign exchange reserves. Curbing gold imports is a way to protect the economy's external position.

When one Asian giant buys gold for its reserves and another taxes it at the border, the price is set by a tug of war between policy choices.

For the April to September period, India's gold imports fell 27.32 percent to 19.27 billion dollars. The data does not show exactly how much of the decline came from the higher duty and how much from the appeal to delay purchases, but together they have sharply cut demand.

What it means for gold prices

Gold has had a volatile 2026. It reached a record near 5,600 dollars an ounce in January before falling back, and it traded near 4,169 dollars in mid October, according to Fortune. The collapse in Indian demand removes an important source of physical buying, while China's official purchases help offset it.

Other forces matter too. Higher interest rates make non yielding gold less attractive, and a strong dollar tends to weigh on prices. On the other hand, geopolitical risk and inflation concerns support gold as a safe haven. The balance between these forces will determine whether gold recovers toward its record or drifts lower.

For investors, the key point is that official sector buying has become a central driver. As long as China and other central banks keep adding gold, a significant share of demand comes from buyers who are less sensitive to price than jewellers or retail investors.

Southeast Asia's gold story

Southeast Asia has its own deep relationship with gold. In Vietnam, gold is a core savings habit, and the government has just lowered the threshold for cashless gold purchases to 5 million dong a day to improve transparency, as we reported in our analysis of Vietnam's new gold rule. Thailand is a major gold trading hub, and gold prices influence the baht and household wealth.

The China and India split affects the region through prices and trade flows. Lower Indian demand can push more gold toward other markets, while Chinese official buying keeps global prices supported. Southeast Asian savers, jewellers and traders feel those shifts directly.

The key points for Asian gold markets are these:

• Central bank buying, led by China, is supporting prices despite weaker consumer demand.
• India's duty hike has sharply cut imports to protect its currency and trade balance.
• Gold remains well below its January record but historically high.
• Southeast Asian governments are tightening oversight of gold trading.

Policy shapes the market

The great gold split shows how much government policy now drives the gold market in Asia. China's central bank is buying to diversify its reserves and reduce dependence on the dollar. India's government is discouraging purchases to protect its currency and trade balance. Both decisions are rational for their own economies, and together they define the market's direction.

For investors and savers across Asia, the lesson is to watch policymakers as closely as prices. Central bank buying, import duties and rules on gold trading can move the market as much as interest rates or inflation, and in 2026, Asia's governments are firmly in control of the gold story.

Asia's gold market is being pulled in two directions by two governments with different priorities. China's central bank is quietly building its reserves month after month, while India has used taxes and appeals to cut imports to a fraction of last year's level. For anyone holding or trading gold in Asia, the message is that policy has become the market's most powerful force, and the next move in prices may come from Beijing or New Delhi rather than from the trading floor.