China’s gold buying and Hong Kong’s planned gold hub are being used to support wider use of the yuan, even as the currency remains far behind the dollar in global finance.
01Summary
- 01China has been buying gold every month for nearly two years as part of a push to narrow the gap with the US in gold holdings.
- 02Hong Kong confirmed last month that it is developing a yuan-denominated gold market, with a vault linked to Shanghai allowing physical gold delivery in yuan.
- 03S&P Global Ratings said Hong Kong plans to expand the vault’s capacity from 150 tonnes to more than 2,000 tonnes over the next three years.
- 04The US holds more than 8,100 tonnes of gold, while China holds about 2,300 tonnes, according to World Gold Council figures for the second quarter.
- 05Analysts said China’s 23-month gold buying streak and reserve build-up support the renminbi’s internationalisation drive, though they do not expect a major shift soon.
02Why it matters
For markets, the story shows how China is trying to build more channels for yuan use in trade and reserves. It also matters because greater gold and yuan activity could slowly chip away at the dollar’s dominance in parts of the financial system.
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