China kept its benchmark lending rates unchanged for the sixth month in November 2025, holding the one-year LPR at 3.0 percent and the five-year at 3.5 percent. The decision came despite slowing loan demand, weak retail activity and pressure on exports.
The message is simple: Beijing is playing defense, not offense. The central bank isn’t willing to push broad monetary stimulus yet, even if growth is losing steam. It’s leaning on targeted measures instead of big cuts.
Why This Matters Outside China
China’s rate policy doesn’t stay in China. It bleeds into global commodities, currencies and sentiment. A steady LPR means Beijing is not trying to flood the system with cheap money, which keeps growth expectations muted.
That affects everything from metal demand to how investors position themselves in currencies.
Impact on Gold
1. Slower Chinese growth usually softens physical demand
China is one of the world’s largest buyers of physical gold. When the economy cools, jewelry demand and investment buying drop. An unchanged rate suggests no new growth boost, which caps physical demand.
2. But macro uncertainty still supports gold
A cautious PBOC is a signal that the world’s second-largest economy is struggling. Investors hate uncertainty, and gold thrives on it. So even if physical demand softens, safe-haven buying can rise.
3. Net effect: neutral to mildly bullish
You don’t get a big rally from this decision alone, but you get firmer support under gold because markets see “slower China + cautious central bank” as another global risk factor.
If the Fed and Europe continue easing while China stands still, that adds more fuel to gold. If US data stays strong and rates stay higher, gold stays capped. The PBOC move by itself doesn’t drive gold, but it reinforces the broader geopolitical anxiety that keeps gold propped up.
Impact on the US Dollar
1. China standing still supports the dollar indirectly
When China doesn’t ease but its growth keeps losing momentum, global money tends to move toward stability and yield. The dollar sits at the top of that food chain.
A cautious China means investors don’t expect strong Asian growth. So funds avoid riskier currencies and stick with the dollar.
2. No stimulus means no revival in Chinese demand
If China isn’t pushing aggressive policy, commodity currencies (AUD, NZD, CAD) lose support. That often drives them lower, which naturally strengthens the dollar on a relative basis.
3. Yuan pressure also boosts the dollar
A steady LPR with weak growth keeps the yuan under downward pressure. Whenever the yuan weakens, the dollar strengthens automatically in the USD/CNY pair. That spillover lifts the dollar index as well.
Net effect: dollar bias remains upward
This decision doesn’t trigger a massive move, but it reinforces the trend: the US dollar remains the safe and stable option while China hesitates.
Bottom Line
China’s decision to hold rates steady is another sign the country is unwilling to make bold moves to revive growth. That keeps global investors in risk-off mode.
Gold benefits from the uncertainty.
The dollar benefits from investors searching for stability.
Neither reaction is explosive, but both are predictable and logical.