China Boosts Gold Reserves and Sells US Treasury Debt Amid De-Dollarization Trend

China has joined the global trend of de-dollarization and diversification of foreign exchange reserves by selling off US Treasury debt and increasing its gold bullion reserves. According to a report on Baijiahao, China’s Central Bank has been accumulating gold reserves, which has led to an increase in its official gold holdings of 66.76 million ounces, with an increase of 260,000 ounces from the previous month. China had not increased its gold reserves from September 2019 until October 2022, but in November 2022, the country began to bulk up on the precious metal.

Gold has become a safe haven and a preferred investment choice for investors, and its spot price has risen to $2,045.79 per ounce on May 4, just $27 below its all-time high of $2,079.67 per ounce. China is not the only country to embrace the gold frenzy, as data from the World Gold Council shows that global central banks increased their gold holdings by a total of 228 tons in the first quarter of 2023.

The People’s Republic of China (PRC) has been selling off US Treasuries due to higher dollar interest rates and a volatile international environment. The country has used the dollars earned from the sale of Treasuries to invest in gold, which has been viewed as a safer investment option. Data released by the US Treasury Department in March indicated that China’s holdings of Treasury debt had dropped to $859.4 billion in January 2023, marking a decline for the sixth consecutive month.

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