China Cuts US Treasuries to 18-Year Low Amid Gold Surge

The People's Bank of China is accelerating a de-dollarization strategy by reducing its holdings of US Treasuries and aggressively increasing gold reserves. In September 2026, the central bank purchased 740,000 ounces of gold—approximately 23 tons—marking the largest monthly increase since September 2023 and extending a buying streak to 23 consecutive months.

This shift coincides with a sharp decline in Chinese holdings of US bonds, which fell to an 18-year low of $618 billion in July. Officials and analysts attribute this diversification to geopolitical tensions and the perceived risk of the "weaponization of the US dollar" following Western governments' freezing of Russian assets.

Beyond official reserves, Chinese households and businesses are increasing demand for physical gold bars and coins as a safe haven amid a struggling domestic real estate market and low government bond yields. China imported over 1,000 tons of gold worth $158.8 billion in the first eight months of 2026, surpassing the total imports for all of 2025.

This sustained official and private demand is providing a structural cushion for international gold prices, offsetting downward pressure caused by a strong US dollar and rising energy prices.