[-]Replacing USD with gold in its reserve account is a bad thing?
No, that sovereigns with excess (surplus) external trade positions don't use it to purchase gold reserves strikes me as odd. However this could be happening via USD->AUD transfers and buying AUS gold bullion via FX arbitraging.
This helps drive the AUD higher and results in derisking FX rates to purchase physical gold via FDI (foreign direct investment). I don't know what penalties are incurred removing physical gold from AUS, maybe it remains here.
The trend in reducing net purchases of USTreasuries is across the board. China's net investment position in the US has not changed since Apr2010 (net zero increase).
Totals of all net purchasing of US debt by type since 1988 - note: does not include redemptions since 1988, totals above indicate volume of activity only.
Hard to see on this graph - Japan net purchases are sizeable rising recently (considering diminishing Japan trade surplus = surprising), China net zero since Apr2010. Note Cayman is the US tax shelter prefering to buy higher yield corporate debt to beat real inflation. But all are generally trending lower (net).
US Treasuries "real yield" now -ve out to 10 year. No-one buying large quants of US Debt will want to hold onto it since 2010 - as the data shows. Average US debt term remains around the 4 year maturity on total owing.