Australia's Gold Boom Linked to China's Bid for a New Reserve Currency

Australia's gold exports have reached an all-time high, surpassing coal and natural gas to become the country's second-largest resource export after iron ore. The value of gold exports increased by 46% last financial year, reaching $68.4 billion. This boom in gold demand is not just driven by traditional safe-haven buying during times of international upheaval but also by a significant increase in Chinese gold purchases.

Over the past five years, China's central bank has more than doubled its gold reserves from 3.3% to 8.64% of its international reserves. In 2026, China purchased 60 tonnes of gold, lifting its total holdings to a record 2,366 tonnes. This surge in Chinese demand is being driven by Beijing's long-term strategy to reduce its dependence on the US dollar and increase the use of the renminbi.

China's official policy change designates gold as a 'strategic mineral' and a 'cornerstone of financial and industrial security.' The country aims to expand its official gold holdings, deepen support for the domestic gold industry, and encourage Chinese miners to outpace their global counterparts. This move is seen as part of China's broader plan to challenge the US dollar's reserve currency status.

Australia has significant economic skin in this outcome, with the country exporting 300-odd tonnes of gold per year to feed the vaults of foreign central banks, particularly China's. The Reserve Bank of Australia, however, remains unchanged, holding only 80 tonnes of gold stored in London for the past 29 years.