China may not go for further gold buying

China’s appetite for further gold purchases may be limited, according to the country’s chief foreign-exchange regulator who has also offered soothing words about China’s role as an investor in U.S. Treasurys. “Gold is not a bad asset, but currently a few factors limit our ability to increase foreign-exchange investment in gold,” said Yi Gang, director of China’s State Administration of Foreign Exchange.

He said gold doesn’t offer good long-term returns because of price swings. China rarely reveals its thinking on its investment of its foreign-exchange reserves, which at $2.4 trillion is the world’s largest. Yi said that while China’s gold reserves, at 1,054 metric tons, are the fifth-largest in the world, the holdings represent only about 1.5% of China’s foreign-exchange reserves at current market prices.

Amid continuing jitters about Beijing’s appetite for U.S. debt, Yi also said China holding Treasurys can be mutually beneficial for China and the U.S. China buys and sells U.S. Treasurys on a daily basis and Beijing doesn’t want such trading to be politicized,  Yi said. He reiterated that China will be a “responsible investor” in Treasurys.