China, abandoning US Treasury bonds, rushes to 'hoard gold' worth $159 billion...Is de-dollarization accelerating?

▲ Gold/AI generated image

China's gold buying frenzy is intensifying. A total of $159 billion worth of gold hoarding has continued. The movement towards de-dollarization and diversification of foreign exchange reserves is shaking up the gold market.

According to Benzinga, a US financial media outlet, on September 22 (local time), China's gold reserves swelled to a record high of $159 billion. The strategic accumulation of gold by the People's Bank of China (PBOC), China's central bank, has been a key driver. This trend involves reducing the proportion of US Treasury bonds and heavily purchasing gold, a safe asset, to defend against geopolitical uncertainties and the risk of US economic sanctions.

In addition to government-level purchases, private investors' demand for gold has also exploded. As the real estate market slump and stock market volatility have prolonged, household assets have largely shifted to physical gold and gold Exchange Traded Funds (ETFs). Private sector buying, such as the trend of young people buying small gold "beans," combined with the central bank's strategic reserves, has fueled price increases.

China's large-scale gold accumulation is seen as a signal of the weakening of dollar hegemony in the global commodities market. The intention is to build an independent monetary security network by increasing the use of the yuan in trade settlements and raising the proportion of gold as a reserve asset. With strong buying support from China, international gold prices continue their record-high streak per ounce.

Market experts predict that China's gold accumulation trend will not be short-term but will continue into a long-term phase. However, the possibility of profit-taking sales due to the short-term surge in gold prices and whether the People's Bank of China will adjust its monthly purchase speed are considered key variables in the future gold market.

[Key Article Summary]

-China's gold reserves surged to $159 billion, driven by joint buying from the central bank and private sectors.

-Strategic asset diversification to reduce reliance on US Treasury bonds and accelerate de-dollarization is cited as the background.

-Inflows of private funds amid the real estate slump are further supporting the international gold price's record-high rally.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*