Chanced upon this interesting set of data from World Gold Council on the Gold reserves each country has and the percentage allocation as a part of the Total Reserves.
It was surprising to see that Portugal has 90% of its reserves held in Gold whereas China has only 1.6% even though the total gold holding is upwards of 1054 tons and ranks 5th on the table. Japan also has a low percentage of 3% and ranks 8th on the table with gold reserves of 765 tons.
One should note that China and Japan own US debt to the tune of 1.2 trillion and 912 billion USD respectively. At current prices the value of Chinese and Japanese Gold is 55 and 40 billion dollars and the US treasury bills make up 35% and 54% of their Reserves.
The high US Gold Holding could be one reason why China and Japan have not increased their exposure to Gold as they would feel they are owning Gold indirectly by owning US securities. In case of a US default the debt could be paid by using Gold reserves.
In the recent months the Chinese purchase of Gold has increased many fold and it could be a attempt on part of the government to shore up Gold reserves to thwart any financial crisis.
With Gold falling in the recent days and continued central bank purchases Gold supply in the market might reduce and force a short squeeze resulting in higher Gold prices