China’s Gold Reserves Are Growing Fast—But Can They Overtake the US?

China’s official gold reserves have been rising steadily for over a year, prompting questions about whether the country could surpass the United States as the world’s largest holder of the metal within the next five years. As of the latest data from the People’s Bank of China (PBOC), China’s gold holdings stand at approximately 2,264 tonnes, while the US holds over 8,133 tonnes—a gap that remains substantial despite China’s aggressive buying spree.

How Big Is the Gap and What Would It Take to Close It?

The short answer is: the gap is still very wide. The US holds more than three and a half times the gold that China does. To put it in perspective, China would need to nearly quadruple its current reserves just to match the US. Even if China continued buying at its recent record pace—roughly 100 tonnes per year—it would take over 58 years to reach the US level, assuming US reserves remain static.

However, the question is not purely about raw tonnage. The US has not significantly increased its gold reserves since the 1970s, and its official holdings have remained stable for decades. China, on the other hand, has been steadily accumulating gold since 2009, with a notable acceleration in the last two years. This has led some analysts to speculate about a long-term shift in global reserve dynamics.

Why Is China Buying Gold?

China’s gold purchases are part of a broader strategy to diversify its foreign exchange reserves away from the US dollar. The country has been reducing its holdings of US Treasuries and increasing its gold reserves to protect against currency risks and geopolitical uncertainties. This move is consistent with actions taken by other central banks, particularly in emerging markets, which have been net buyers of gold for over a decade.

The World Gold Council reported that central banks globally bought a record 1,136 tonnes of gold in 2022, and China was a significant contributor. In 2023, China’s PBOC added over 200 tonnes, marking the longest consecutive buying streak in its history. The trend continued into 2024, with China reporting gold purchases for 17 consecutive months as of April 2024.

What Would a Surpass Mean for the Global Economy?

If China were to overtake the US in gold reserves, it would be a symbolic shift in global financial power. Gold has long been seen as a safe-haven asset and a hedge against inflation and currency devaluation. A larger gold reserve would give China more financial leverage and reduce its reliance on the US dollar, which could have implications for global trade and monetary policy.

However, most economists agree that such a scenario is unlikely within the next five years. The sheer volume required makes it impractical, and China’s gold purchases are likely to slow as it reaches its target level. Moreover, the US has no incentive to sell its gold, and its reserves are considered a strategic asset.

Expert Opinions and Market Realities

Market analysts are divided on the long-term outlook. Some, like those at Goldman Sachs, believe that central bank demand for gold will remain strong, driven by geopolitical tensions and the desire for reserve diversification. Others, however, point out that China’s gold reserves as a percentage of its total foreign exchange reserves are still relatively low—around 4% compared to the global average of 15%—which suggests there is room for further accumulation.

But even if China were to increase its gold reserves to 5,000 tonnes over the next decade, it would still be far behind the US. The US has not changed its gold holdings since 1973, and there is no indication that it plans to do so. As such, the question of surpassing the US within five years is more a topic of speculative debate than a realistic forecast.

Conclusion

While China’s gold reserves are growing at an unprecedented rate, the likelihood of surpassing the US within five years is extremely low. The gap is simply too large, and the pace of accumulation would need to accelerate dramatically—something that is neither practical nor likely given the constraints on global gold supply. For now, the US remains the world’s largest gold holder by a wide margin, and China’s gold strategy is more about diversification than about overtaking a long-established leader.

FAQs

Q1: How much gold does China currently hold?
As of the latest data from the People’s Bank of China, China holds approximately 2,264 tonnes of gold, making it the sixth-largest holder in the world.

Q2: How much gold does the US hold?
The United States holds over 8,133 tonnes of gold, the largest official gold reserve in the world. This amount has remained unchanged since the 1970s.

Q3: Why is China buying gold?
China is buying gold to diversify its foreign exchange reserves away from the US dollar, reduce currency risk, and enhance its financial security amid geopolitical uncertainties.