China Cuts US Treasury Holdings as Its Gold Buying Draws Attention

China’s reported US Treasury holdings have fallen from about $1.2 trillion in 2012 to roughly $625 billion. At the same time, its gold purchases have attracted growing attention. The chart shared here estimates that China bought about 40 tonnes of gold through London’s over-the-counter market in June. China also sources gold from several markets, including Russia and South Africa. To me, this looks like a strategic move away from dollar-denominated debt and towards gold reserves. What could sustained Chinese selling mean for the US bond market, the dollar and the wider US economy? I will examine that in subsequent posts.

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