China has 1,054 metric tonnes which, with gold selling at $941/oz, is worth $35 billion compared to America's 8,133.5 metric tonnes worth $270 billion.
Dow Jones reported that gold was up during the day's trading: "The initial rise occurred on a day when the U.S. dollar weakened partly in response to comments from the People's Bank of China saying it will push for reform of the international currency system to make it more diversified and reduce over-reliance on the current reserve currencies, primarily the dollar. This particularly caught the eye of gold traders a day after a senior economic researcher in the Communist Party expressed concern about the dollar and said gold could be a better alternative.
"'The People's Bank of China's call for a new global reserve currency or super-sovereign currency will likely lead to further pressure on the dollar and gold buying,' said Mark O'Byrne, director of bullion dealer GoldCore. "
The BRIC countries have called for the creation of a new reserve currency or at least a reduced dependence on the dollar.
"China does not disclose the composition of its currency reserves, but bankers assume around 70 percent of it is held in dollar assets.
"China is the largest single holder of U.S. Treasuries, with $763.5 billion at the end of April, according to U.S. Treasury data. [ID:nTRU000389].
"Analysts say this data set understates the true number as it does not capture paper bought through dealers in London or elsewhere.
"Li said a second reason for buying more gold would be in anticipation of the yuan one day becoming a reserve currency.
"The yuan is not convertible on the capital account, meaning it cannot be freely traded for other currencies for financial transactions that are not related to trade.
"This rules out the yuan's use as an international reserve currency, for central banks would not be able to convert it quickly if necessary.
"But, in a very preliminary step towards that goal, China is paving the way for greater use of the yuan beyond its borders.
The People's Bank of China has arranged currency swap deals with six countries since December totaling 650 billion yuan ($95 billion) so that trade and investment with China can be conducted in yuan, not dollars.
"The four currencies in the SDR, which must be convertible, are those issued by Fund members with the largest share of global trade. The weights assigned by the IMF are based on the value of exports and the amount of reserves denominated in those currencies.
"The composition of the basket is reviewed every five years. the next review is due in 2010."