The blistering rally in gold is nudging China a little closer to its long-stated ambition: a world less tethered to US-centred finance.
Beijing has been stockpiling for over a decade, amassing what may now be the world’s sixth-largest hoard. Today’s vertiginous surge in bullion merely supercharges that campaign. Last week, gold broke through $4,000 an ounce for the first time, buoyed by President Donald Trump’s erratic policies. With international tensions high and alliances fraying, the metal has moved centre stage — and Chinese officials are not wasting the opportunity.

Since January, Beijing has bolstered Hong Kong’s role as a trading hub through the Shanghai Gold Exchange’s first offshore vault. It has also courted other countries to store bullion in Chinese bonded warehouses. The next step: persuading central banks and sovereign funds to trade the metal they park there — much as they do in London — a quiet encroachment on the world’s most established venues.
All the stars are aligned: reserve diversification, geopolitical volatility, and the rise of alternative payment systems. China is already the world’s largest gold producer; it now wants a louder voice in the global financial system — and the timing couldn’t be better.
Gold ticks several boxes at once. Capturing a bigger slice of the bullion market would bolster Beijing’s claim to the international role it believes it deserves. It would also buttress the yuan’s use, and even give Hong Kong a modest lift. Most of all, it lets China offer an alternative to US financial primacy at a time when Washington imposes sanctions with abandon — even on its oldest trading partners.

Gold has almost quadrupled in a decade, climbing past $2,000 during the pandemic and $3,000 in March as Trump’s tariff talk gathered steam. Everyone from government officials to Costco bullion shoppers has felt the pull. ETFs made betting on gold frictionless in the 2000s; central banks later piled in. Last year, they accounted for over a fifth of global demand, versus roughly a tenth in the 2010s.
Recently, the prospect of stickier inflation and lower interest rates has added fuel to the fire. Fears over swelling US debt and Washington’s political theatre have pushed bullion beyond $4,000, while investors from Tokyo to London have embraced what’s now called “the devaluation trade.”

For policymakers — Beijing’s included — high prices only reinforce gold’s appeal as a reserve asset, underscoring the belief that by drawing more bullion into its orbit, China can elevate both its markets and its currency. If China holds more gold, the renminbi gains credibility.
Beijing has also moved to extend its financial influence: loosening capital controls, introducing a payments link with Hong Kong, and nudging domestic money offshore. A tentative revival in Chinese tech has tempted global investors back into everything from A-shares to convertibles.
Still, the yuan-isation of global finance remains partial at best. Yuan-denominated copper and oil contracts have only a fraction of the liquidity of their dollar benchmarks. And while a greater share of China’s cross-border trade now settles in RMB, the currency is far from dominant in third-party trade.

London still owns the bullion beat. Shanghai’s ambitions have yet to match its rhetoric. The capital account remains anything but open, and the People’s Bank of China still casts a long shadow. Outbound flows are tightly managed through quotas. Even in gold — where Shanghai offers a “dollar-light” settlement alternative — liquidity still trails London’s.
London’s model is, of course, the one Beijing covets. At the empire’s height, bullion flowed to the British capital for settlement, reinforcing its legal, financial, and commercial dominance. The city built vaults, set refining standards and price benchmarks. The London Good Delivery rules made large-scale trading efficient; liquidity attracted more liquidity.
Today, London remains the world’s biggest spot market. China trails behind — even a decade after foreigners were allowed to trade the yuan in Shanghai. Much of London’s advantage is historical inertia: liquidity tends to stay where it already is.
One pillar that has caught Beijing’s attention is central-bank custody. Over 8,800 tonnes of gold sit in London, making the Bank of England the world’s second-largest official custodian after the New York Fed.
China wants its own version. This year, it began courting central banks to buy and store bullion in SGE-linked vaults. Becoming a custodian for friendly reserves would give Beijing not just prestige, but influence over the architecture of a less dollar-dependent world.
The incumbents aren’t invincible. Several countries — Germany, Poland, the Netherlands, and Serbia — have repatriated their gold for political or security reasons. Beijing’s sales pitch writes itself: a non-Western financial corridor immune to Western sanctions, a safe harbour for BRICS and their allies — a club that has grown from investment acronym to geopolitical bloc representing roughly 40% of global GDP.
China’s partners hardly need reminding that Venezuela’s gold has been frozen in London for years. Allowing central banks to lend and trade bullion on the SGE would be a logical next step.

China, ever the student of history, has learned from Russia — first from the Soviet collapse, now from Putin’s financial fortress. Moscow’s gold, accumulated after the 2014 Crimea annexation as it de-dollarised, has since become pivotal. It was never sold; it merely cushioned the blow of frozen FX reserves. Prices have more than doubled during the war years.
Gold, according to a UK RAND Europe report commissioned by the Foreign Office, is a strategic asset for Moscow — the cornerstone of its wartime economy.

Beijing, meanwhile, has boosted its reported reserves in waves since 2015, and for eleven consecutive months recently, while slashing US Treasury holdings, now down 41% from 2015 levels.
The price surge has taken bullion into uncharted territory, but even if the heat cools, the drivers remain: central-bank diversification and political hedging.
China now discusses alternative payment rails with growing confidence — and gold, as ever, sits gleaming at the centre.