China's gold reserves could surpass those of the United States within the next five years, according to analysts at BMO Capital, who point to China's substantial unreported gold purchases as the driving factor behind the projection.

The United States officially holds just over 8,133 tonnes of gold in its reserves, though the actual figure remains uncertain because the U.S. government has declined to conduct a comprehensive audit. China's officially reported reserves stand at 2,346 tonnes — but multiple independent analyses suggest the true number is far higher.

China's accumulation is part of a broader trend among emerging market central banks. The World Gold Council reported record net gold purchases by central banks in both 2022 and 2023, with China the largest reported buyer, as institutions across emerging markets diversify reserves away from dollar-denominated assets.

Evidence of Covert Accumulation

In 2024, Money Metals researcher Jan Nieuwenhuijs analyzed available data and concluded that the People's Bank of China (PBOC) covertly purchased approximately 570 tonnes of gold during the year, despite reporting only a 41-tonne increase to its reserves.

Mainstream financial institutions have increasingly flagged the same pattern. The Financial Times published a report on unreported Chinese gold buying late last year. More recently, Goldman Sachs analysts estimated that China acquired more than 48 tonnes of gold in May alone through the London over-the-counter (OTC) market, while the PBOC reported just a 10-tonne increase for the same period.

Nieuwenhuijs's analysis of both formal and informal sources indicated that by the end of 2024, the PBOC held more than 5,000 tonnes of monetary gold — more than twice its publicly disclosed figure.

BMO's Estimates and Projections

BMO Capital analysts estimate that the PBOC currently holds approximately 5,200 tonnes of monetary gold, representing roughly 13 percent of the total above-ground gold supply.

"China has another ~5 years of buying at current rates for the PBoC to reach the USA's level of treasury reserves, but in total gold terms could surpass the U.S. much sooner," BMO analysts stated.

The combination of aggressive central bank buying and domestic investment demand, they noted, is expected to give China "more leverage in global pricing, enabled by its sheer scale of demand and growing futures and OTC market liquidity."

Regarding China's broader strategic objectives, BMO analysts acknowledged the difficulty in determining the endgame:

"Unsurprisingly, China hasn't disclosed its ultimate gold accumulation targets. But given its stated ambitions for economic expansion and RMB internationalization, our view is that achieving the U.S.'s level of holdings is an absolute minimum target, implying another 2,500-3,000 tonnes of purchases, achievable in two to five years depending on method. Yet aspirations are likely higher still given the need to establish RMB credibility globally, with ongoing acquisitions ($18bn to date) of overseas assets a key pillar of its strategy."

BMO analysts also observed that U.S. gold reserves currently represent approximately 5 percent of the M2 money supply. For China to reach an equivalent ratio, it would need to accumulate roughly 18,000 tonnes of gold.

The gold buildup dovetails with China's push for broader use of the yuan in cross-border trade settlement, including through platforms such as the Cross-Border Interbank Payment System (CIPS), and with discussions among BRICS members on reducing dependence on the dollar in international trade.

Hong Kong's New Gold Infrastructure

Beyond its central bank reserve ambitions, China is taking steps to expand its role in the global gold market. Earlier this month, Hong Kong launched trial operations of a government-owned gold clearing and settlement system, positioning the region to challenge Western dominance in global gold trading.

A spokesperson said the new system will "mirror" the financial infrastructure used by the London Bullion Market Association (LBMA). The platform will offer "a comprehensive suite of services ranging from gold deposits and withdrawals to transaction settlements in the over-the-counter market in Hong Kong," the spokesperson added. A new gold price ticker — HAU — will also be introduced to "ensure that Hong Kong gold prices are fully accessible to global market participants."

BMO analysts said China expects the initiative to attract greater international gold trading activity and potentially shift pricing power away from traditional Western financial centers.

Global gold price discovery is currently concentrated in London and New York, anchored by the LBMA and COMEX respectively. Hong Kong's platform represents the most significant infrastructure challenge to that duopoly from an Asian exchange hub, and its uptake among international participants will be a key indicator of whether pricing influence begins to rebalance toward the region.