China has achieved a milestone in its gold-custody strategy, with Cambodia becoming the first foreign government to move ahead with storing its reserves in Chinese vaults. The deal comes as Beijing extends its role in the global bullion ecosystem and challenges traditional custody hubs like London and New York.
Under the agreement, Cambodia will transfer part of its sovereign gold reserves into Chinabased vaults, leveraging the infrastructure managed through the Shanghai Gold Exchange and aligned state banks. Analysts say the move reflects China’s ambition to deepen its leverage over global reserve chains and reduce reliance on Western-dominated financial networks.
Strategic Shift in Gold Custody
The agreement signifies a key step in China’s broader financial strategy. By inviting foreign reserves into its custody vaults, China is positioning itself as an alternative to traditional bullion centres, offering storage tied to yuan-settled transactions and reduced exposure to dollar-based systems.
Lonely as it may be now in partner count, the Cambodia deal underlines the concept of ‘reserves beyond politics’ with China catering to nations seeking less exposure to Western banking and sanctions risk. Gold stored in China may be perceived as less subject to external freezing or geopolitical clamp-downs than assets held in traditional Western centres.
Reserve Diversification and Market Signals
For the global gold market, the deal further validates gold’s role beyond retail and jewellery demand to sovereign-reserve strategy. Central banks around the world continue to add gold, and China’s custody solution may prompt fresh reserve flows into bullion. If more governments follow Cambodia’s lead, gold demand could rise meaningfully, further tightening physical availability and supporting higher prices over time.
Key indicators to watch now include whether other countries formalise gold-transfer deals with China, how much gold moves into Chinese custody, and whether gold-price benchmarks reflect a shift in custody flows. The evolving scenario may mark the start of a new chapter in how global reserves are held and managed.
