China Cuts US Treasury Holdings by $900 Million, Boosts Gold Reserves

China has reduced its holdings of US Treasury securities for the third consecutive month, opting to accumulate significant amounts of gold bullion instead. According to the latest data from the US Treasury, China decreased its T-Bill holdings by $900 million, from $757.2 billion in April to $756.3 billion in May. This reduction marks the third straight month of Treasury sell-offs since February, when China held $784.3 billion in US bonds.

Reports suggest that China is covertly purchasing much more gold than what is publicly disclosed. Analysts speculate that China may be downplaying its gold purchases to avoid driving up prices. Stefan Gleason, president and chief executive at Money Metals, suggests that China's strategy of limiting public disclosures is a sensible move to keep its purchases efficient and cost-effective. Joseph Cavatoni, a market strategist, also notes that there is debate over whether the People’s Bank of China’s reported gold purchases fully capture its actual activity. He acknowledges the possibility that more gold is being acquired than what is officially reported.

Jan Nieuwenhuijs, an analyst, estimates that China’s gold holdings are likely more than double what is officially reported. According to Nieuwenhuijs, the People’s Bank of China held 5,065 metric tons of gold in its reserve at the end of 2024, significantly higher than the reported 2,280 metric tons. He attributes this discrepancy to China importing much more gold than what is sold in the private market through the Shanghai Gold Exchange.

The latest data from the World Gold Council shows that China holds 2,296 tonnes of gold, valued at over $247 billion. This substantial gold reserve underscores China’s strategic shift towards diversifying its assets away from US Treasuries and into gold, which is seen as a more stable and valuable asset in times of economic uncertainty. This move reflects China's broader strategy of reducing its reliance on US financial instruments and enhancing its economic resilience through increased gold holdings.