Trump Appointing A 'Shadow Chair' At The Fed Has Put Dollar Under Pressure, Meanwhile China Is Dumping The Greenback And Hoarding Gold

China is accelerating its move away from U.S. dollar-denominated assets, with the share of U.S. Treasuries and the Dollar in the country’s reserves reaching its lowest levels in over a decade.

What Happened: On Thursday, The Kobeissi Letter, in a post on X, captured this dramatic shift, which began back in 2016 and has accelerated substantially in recent years.

“The share of US Treasury Holdings in total Chinese FX reserves has declined by 15 percentage points since 2016,” it says, with a chart highlighting the same. At the same time, its allocation to gold has risen nearly five percentage points to a record 6.8%, essentially doubling since 2022.

See Also: Why Are Central Banks Still Stockpiling Gold?

During this period, the People’s Bank of China has acquired 200 tonnes of gold in an effort to boost its hard assets, while becoming less vulnerable to Western sanctions and the dollar-based financial infrastructure.

The chart highlights an acceleration in the trend beginning in early 2022, when Western powers froze nearly $300 billion worth of Russian assets following its invasion of Ukraine.

“Gold is more desired than ever,” the post concludes, capturing the growing global interest in the metal as a store of value amid economic uncertainty, persistent inflation, and sovereign risk.

Why It Matters: China’s gold imports surged 73% year-over-year in April 2025, after the People’s Bank eased restrictions on imports, to cater to the growing retail and institutional demand.

Analyst Rick Rule of Rule Investment Media attributes this to the absolute erosion of the dollar’s purchasing power. He says, “In the next 10 years, the U.S. dollar will lose about 75% of its purchasing power,” while adding that “It will do relatively well relative to other currencies, but it won't do well in the absolute sense.”

Harvard economist Kenneth Rogoff recently commented on the consequences of this trend, saying that “Americans are not prepared” for the fiscal and monetary strain that de-dollarization is set to create going forward.

“I think real interest rates are going to be higher for a very, very long time,” Rogoff said. “That era of low interest rates is over.”

Price Action: The U.S. Dollar Index (DXY) just hit its lowest level since February 2022, trading at 97.298 against a basket of other currencies.

This comes amid growing concerns of President Donald Trump appointing a “shadow chair” for the Fed well before Jerome Powell’s term ends in 2026. Since Trump took office in January, the index is down steeply, by 11%, dropping from 109.35.

Meanwhile, Gold spot prices are down 0.39%, trading at $3,318.12/oz at the time of writing this.

Photo Courtesy: Miha Creative on Shutterstock.com

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