China is one of the world's largest buyers of gold as central banks shift towards the precious metal, which has overtaken US Treasuries to become the world's top reserve asset amid higher valuations and its appeal as a geopolitical hedge, the European Central Bank said.
The world's second-largest economy was the fourth-largest per-country buyer of gold in 2025 after Poland, Kazakhstan and Brazil, purchasing about 25 tonnes, the ECB stated. It estimated that China had bought more than 350 tonnes of gold since early 2022, more than any other country.
Gold accounted for 27% global official foreign reserves at the end of 2025. By contrast, US Treasury bonds - long considered one of the world's safest reserve assets - fell to 22%, with the euro making up 15%. Those figures comprised both foreign exchange holdings and gold, the Frankfurt-based central bank said in a report this week.
Gold's share topped Treasuries and the euro mainly because of "valuation effects", with prices rising by about 60% last year and 30% in 2024, according to the report. These gains "mechanically increase the share of gold in total official foreign reserves", the central bank said.
Gold reached historic highs in 2025 against a backdrop of geopolitical instability, political pressure on the US Federal Reserve and wider efforts to reduce dependence on the US dollar. Purchases of the precious metal might also reflect central bank efforts to "strengthen balance sheet resilience amid rising geopolitical risks", the ECB said.
"Survey data suggest that central banks hold gold not only for diversification but also as a hedge against geopolitical risk," the central bank added.
"Central banks with larger gold purchases also tend to be located in higher external conflict risk regions."
The shift had coincided with declining confidence in US Treasury bonds whose appeal, according to Chen Zhiwu, chair professor of finance at the University of Hong Kong, had been undermined by US President Donald Trump's global trade war, launched in April 2025, and the Iran war that began in late February.
"Trump being the president has not only made the institutional quality of the US more and more questionable but also made the standing of the US in doubt," Chen said.
China has significantly reduced its US Treasury debt holdings since 2022, including a March cut to US$652.3 billion from US$693.3 billion the month before, according to US Treasury Department data released last month.
However, the ECB noted that without the increase in gold valuations since 2024, the asset would account for just 16% of global reserves, equal to the euro's share and below US Treasuries at 26%. The report cautioned that gold faced structural limitations as an official reserve asset relative to major fiat currencies.
"Its price is volatile, it is not remunerated and, when held in physical form, it is costly to store," the ECB stated. "More importantly, the supply of gold is not fully elastic and does not adjust seamlessly to shifts in international demand for liquidity."
