China has snapped up a huge amount of gold for 16 months in a row

• China has added to its gold coffers for 16 months in a row, Bloomberg data shows.
• Gold hit new record highs this week, hovering at $2,162 an ounce on Thursday.

China's gold-buying spree has been going strong for 16 consecutive months.

The People's Bank of China added roughly 390,000 troy ounces of the key metal in February, according to government data cited by Bloomberg on Thursday. In total, China's central bank holds 72.58 million troy ounces of gold, or roughly 2,257 tons.

On Thursday around 10:00 a.m. in New York, the price of gold hovered at a record high of $2,161.90. It's up 5.25% in the last five days, and 18.77% in the last 12 months.

The World Gold Council reported that central banks bought 1,037 tons of gold in 2023, just below the all-time record from 2022. Central bank buying activity has helped the commodity's rally, but recently traders' expectations for rate cuts from the Federal Reserve have also helped fuel price gains.

China's move to build up its coffers with gold, which other central banks around the world have also made over the last year, points to its continued push toward diversifying its holdings, with the goal of becoming less reliant on the US dollar.

The country is part of the BRICS economic bloc — Brazil, Russia, India, China, and South Africa — which has shared ambitions to cut into the global dominance of the greenback.

In any case, demand for gold in China is high, based on the volume of Swiss exports to the country. That nearly tripled in January, Bloomberg data shows, and the bullion binge comes as the country's stock market, economy, and property sector remain on shaky ground.

Historically, investors pile into the safe-haven asset of gold as a hedge against economic tumult or inflation.

"Gold is now the most overbought since March 8, 2022 where it peaked and declined from $2,050 to $1,650," Bank of America strategists wrote in a note on Wednesday. "While we are not calling for that, it is rational to expect price momentum to slow at some point and/or price to dip in given stretched daily RSI conditions."