China’s Hidden Gold Buying: Why?
Speculation has been growing in the gold market that the surge in unrecorded gold purchases could be linked to China.
Overall, some unreported buying of gold by China could have occurred in 2025 and also in 2022-24. This could be a combination of wanting to avoid upsetting Trump during a tense U.S.-China trade situation, the long-term goal of trying to move to onshore assets rather than FX assets that could be frozen, and general diversification reasons like other EM central banks. We doubt it is preparation for a 2027 Taiwan invasion.
Figure 1: U.S. TICS Show China U.S. Treasury Holdings Down USD340Bln Since End 2021 (USD Blns)
Source: Datastream/Continuum Economics
Speculation has been growing in the gold market that the surge in unrecorded gold purchases could be linked to China, due to UK shipment and China import data. Some bank estimates are that China has bought 250 tonnes this year, rather than the official reported 25 tonnes. Official gold buying is at a slightly slower pace than 2024, which does not account for the huge surge in gold prices. World Gold Council quarterly gold demand trends (here), shows that high ETF buying and gold bar/coin purchases are behind some of the demand buoyance and surge in gold prices. Nevertheless, gold analysts feel that a missing piece of the jigsaw behind the gold price rise is unrecorded gold buying by China’s authorities. China’s U.S. Treasury holdings in the TICS data are down USD58.5bln since the end of 2024, while 250 tonnes of gold are USD33.5bln at current prices. Why would they do this?
· Avoid unsetting Trump. One 2025 reason is the tense trade situation with the U.S. If China reported large gold buying and selling of U.S. Treasuries, then a volatile Trump could have increased some tariffs in retaliation. Trump, earlier in the year, threatened 100% tariffs against BRICS if they speeded up a move away from the USD.
· Russia FX freeze post Ukraine. The large unreported gold buying has been evident since 2022, the year of Russia invasion of Ukraine. China, like other EM countries, is likely to have been shocked by the freeze of official FX assets. This has motivated EM central banks to increase their gold holdings, aiming to avoid the risk of U.S. or European authorities freezing assets in the future. China’s U.S. Treasury holdings are down by USD340bln since the end of 2021 (Figure 1).
· Preparing for 2027 Taiwan invasion. A 3rd potential reason is that China is preparing for a Taiwan invasion, with the CIA in 2023 having reported that President Xi ordered the military to be ready for an invasion of Taiwan by 2027. However, with the U.S. keeping its strategic ambiguity policy towards Taiwan, a China invasion or blockade would be very high risk looking at war gaming analysis and Xi is more conservative than Putin. We attach only a 10% probability to a Taiwan invasion or blockade in 2027 (here).
· The fourth reason is that China has many of the broader motivates of EM central banks (Figure 2) including long term hedge against excess USD holdings; serving as a geopolitical diversifier and highly liquid assets.
Overall, some unreported China buying of gold could have occurred in 2025 and also in 2022-24. This could be a combination of wanting to avoid upsetting Trump during a tense U.S.-China trade situation, the long-term goal of trying to move to onshore assets rather than FX assets that could be frozen, and general diversification reasons like other EM central banks. We doubt it is preparation for a 2027 Taiwan invasion.
Figure 2: Advanced and Emerging Central Views on Factors To Hold Gold
Source: World Gold Council 2025 survey of central banks