Gold Surpasses US Treasuries as Top Global Central Bank Reserve Asset

Gold Ascends to Dominance: A Paradigm Shift in Global Central Bank Reserves

A Historic Overtake of US Treasuries

In a development that signals a profound recalibration of global financial strategies, gold has officially supplanted US Treasuries as the premier reserve asset held by central banks worldwide. This significant milestone, achieved by the close of 2025, is the culmination of a sustained period of deliberate accumulation of gold by monetary authorities, amplified by an unprecedented surge in the precious metal's valuation over the preceding two years. The European Central Bank's (ECB) latest report confirms this dramatic alteration in reserve composition.

According to the ECB's findings, gold constituted a commanding 27% of total central bank reserves by the end of 2025, marking a substantial increase from 20% in the prior year. Concurrently, US Treasuries, long the bedrock of international reserves, saw their share diminish from 25% to 22%. Reserve assets denominated in Euros maintained a steady position, holding firm at 15%.

Underlying Drivers of the Reserve Restructuring

Central bank reserves are the linchpin of global financial stability, serving critical functions such as anchoring domestic currencies, facilitating international payments, and providing a buffer against economic shocks. The evolving structure of these reserves is not merely a statistical anomaly but a reflection of deeper strategic imperatives driving national monetary policies. A primary impetus is the increasing global desire to diversify away from an over-reliance on the US dollar. This trend has been notably accelerated since 2022, following the imposition of sanctions by the United States on Russia and the subsequent freezing of its dollar-denominated reserves, which served as a stark reminder of the potential risks associated with concentrated holdings.

In her commentary on the report, ECB President Christine Lagarde underscored this point, stating, "Persistent geopolitical tensions are driving strong gold purchases by central banks."

Revisiting Historical Peaks

The current global holdings of gold by central banks now exceed 3.6 thousand metric tons. This figure brings global reserves remarkably close to the historical peak observed during the Bretton Woods era, when holdings reached approximately 3.8 thousand tons. This earlier period was characterized by the gold standard, where currencies were directly pegged to gold, leading central banks to maintain substantial gold reserves.

The ascendance of gold above US Treasuries is also intrinsically linked to the dramatic appreciation in gold prices witnessed in recent years. By January 2026, gold prices had soared to new record highs, surpassing $5,500 per ounce. This remarkable price performance has significantly enhanced gold's attractiveness and value as a reserve asset.

US Dollar Still Holds the Largest Share

Despite the relative decline of US Treasuries, the ECB's data reiterates that overall US dollar-denominated assets still represent the largest component of global reserves, accounting for 42% of the total. This indicates that the dollar, in its various forms, remains the dominant currency in global reserves.

Shifting Dynamics in 2025: Purchases and Sales

In 2025, net gold purchases by central banks globally amounted to 850 tons. While substantial, this represents a slight moderation compared to the preceding three years, during which average annual net purchases exceeded 1,000 tons.

Key countries that significantly increased their gold holdings since 2022 include China, Poland, Turkey, and India. However, a notable development in 2025 was the emergence of stablecoin issuer Tether as the single largest buyer, acquiring over 100 tons of gold.

In a contrasting move, Turkey, despite accumulating 220 tons of gold since the onset of the Russia-Ukraine conflict in 2022, engaged in a significant divestment in early 2026. Following the outbreak of war in Iran, the country either sold or lent out 130 tons of gold, an action the ECB characterized as "one of the largest reserve reductions in recent years."

The Euro's Steadily Rising International Prominence

Turning to the Eurozone, the ECB report highlights the "steady rise" in the international standing of the Euro over the past decade. Last year alone, the issuance of international debt denominated in Euros increased by 30% to nearly €1 trillion, setting a new historical record. Furthermore, international investors made net investments of €850 billion into Eurozone assets, driving foreign portfolio inflows to levels approaching their peak since the Euro's inception.