Among the many most notable gamers on this shift are India and China. Each international locations have been steadily decreasing their publicity to US Treasuries whereas concurrently growing gold holdings, indicating a deeper rebalancing of reserve administration methods slightly than short-term portfolio changes.
RBI’s strategic shift
India’s evolving reserve composition displays a deliberate coverage alternative by the Reserve Financial institution of India (RBI) to diversify away from US authorities debt. Knowledge launched by the US Division of the Treasury reveals that India’s holdings of US Treasuries fell beneath the $200 billion mark, declining to round $190 billion by the tip of October 2025. This represents a pointy drop of $50.7 billion in contrast with the identical interval a yr earlier.
Throughout this time, the RBI moved decisively in the wrong way with respect to gold. In accordance with RBI knowledge, the central financial institution’s gold holdings rose to 880.18 metric tonnes on the finish of October 2025, up from 866.8 metric tonnes a yr earlier. Notably, this enhance occurred whilst India’s complete international trade reserves remained broadly steady at round $685 billion, suggesting a reallocation throughout the reserve basket slightly than an general growth.
This shift is obvious in gold’s rising share of India’s reserves. As of September 26, gold accounted for 13.6% of RBI’s foreign exchange reserves, up sharply from 9.3% a yr earlier, when complete reserves had been at a document excessive. The rising proportion highlights how gold has change into central to India’s reserve technique slightly than a marginal asset.
The guess behind India’s transfer
Economists argue that the RBI’s determination is rooted in threat administration slightly than ideology. Gaura Sengupta, chief economist at IDFC First Financial institution, has informed ET, “India’s decrease holdings of US Treasury payments replicate the RBI’s push to diversify its international trade reserves by shopping for extra gold.” She added that rising fiscal pressures in superior economies have pushed up world bond yields, growing the chance of valuation losses on reserves held in Treasuries.In accordance with Sengupta, “To restrict this threat, central banks, together with the RBI, are shifting a part of their reserves away from US Treasuries and in the direction of gold.” In an surroundings of unstable rates of interest and ballooning sovereign debt in developed markets, gold gives insulation from mark-to-market losses that fixed-income securities are more and more susceptible to.
A worldwide divide in treasury holdings
India’s actions are a part of a broader world divergence in how international locations handle publicity to US authorities debt. US Treasury knowledge reveals that whereas complete international investments in US Treasury payments stood at $9.24 trillion on the finish of October 2025, the distribution of these holdings has shifted. Nations similar to the UK, Belgium, Japan, France, Canada, and the UAE have elevated their publicity to US Treasuries. Japan stays the most important international holder, with $1.2 trillion, adopted by the UK and China. In distinction, China, Brazil, India, Hong Kong, and Saudi Arabia have diminished their holdings on a year-on-year foundation.
This sample means that geopolitical alignment, threat tolerance and home reserve priorities are more and more shaping how international locations view US debt, slightly than a uniform religion in Treasuries because the world’s final protected asset.
China’s lengthy retreat from US debt
China’s drawdown of US Treasuries has been much more pronounced and politically charged. In accordance with knowledge launched by the US Division of the Treasury as reported by PTI, China’s holdings of US authorities debt fell to $682.6 billion in November 2025, down from $688.7 billion in October. This marked the bottom stage since 2008, underscoring a long-running and regular retreat.
The discount got here whilst general international possession of US debt touched a document excessive, with US allies stepping in to fill the hole. Japan elevated its holdings by $2.6 billion to $1.2 trillion, whereas the UK boosted its publicity by $10.6 billion to $888.5 billion throughout the identical interval.
Analysts view China’s continued trimming of US debt as a part of a broader technique to reconfigure its huge reserve pool. China at the moment holds the world’s largest international trade reserves, totalling $3.3579 trillion on the finish of December 2025, in line with official media.
Diversification, geopolitics and debt sustainability
Chinese language economists have framed the transfer as a technical optimisation train, although geopolitical issues loom massive. Xi Junyang, professor on the Shanghai College of Finance and Economics, informed the state-run World Instances that “the lower in China’s holdings of the US treasuries is a results of elevated optimisation and diversification of holdings of international belongings seen lately, which helps strengthen the general security and stability of the portfolio.”
Others have been extra blunt. Shao Yu, chief economist on the Sci-tech Innovation Administration Analysis Centre at Fudan College, stated Beijing appeared decided to additional cut back publicity to US debt as fiscal dangers mount. “The huge accumulation of debt resembles a Ponzi scheme, the place bigger volumes of latest debt are used to switch the previous. China doesn’t wish to play this sport anymore,” he informed the South China Morning Put up.
These feedback replicate deep unease in China in regards to the long-term sustainability of American public debt, notably in an period of rising rates of interest and intensifying strategic rivalry with the US.
Parallel to the drawdown in US Treasuries, China has been methodically build up its gold reserves. Newest figures from the Individuals’s Financial institution of China present that gold reserves rose to 74.15 million ounces by the tip of December 2025, up by 30,000 ounces from the earlier month. This marked the 14th consecutive month of gold accumulation by the central financial institution.
Xi Junyang famous that the central financial institution is more likely to proceed growing gold holdings as a part of efforts to strengthen reserve stability and enhance resilience in opposition to world volatility. He additionally identified that gold nonetheless constitutes a comparatively smaller share of China’s complete reserves in contrast with different main economies, leaving ample room for additional accumulation.
For China, gold serves not solely as a hedge in opposition to monetary instability but additionally as a buffer in opposition to sanctions threat and foreign money weaponisation, issues which have grown as geopolitical tensions with the US persist.
A structural shift, not a tactical commerce
What unites India and China’s methods is the popularity that the worldwide monetary order is coming into a extra fragmented and unsure section. Rising fiscal stress in superior economies, unstable bond markets and geopolitical fault strains have weakened the once-unquestioned standing of US Treasuries as the final word risk-free asset. Gold, in contrast, carries no default threat, is nobody’s legal responsibility and has traditionally retained worth throughout crises. The continued accumulation of gold by central banks regardless of record-high costs means that these strikes are structural slightly than opportunistic.
For India and China, dumping US Treasuries and shopping for gold is much less about betting in opposition to the greenback within the brief time period and extra about constructing resilience for an unpredictable future. As central banks quietly rebalance their portfolios, the sustained bid for gold might effectively show to be one of many defining monetary developments of this decade.
