Gold eclipses Treasuries in global reserves

Amid intensifying geopolitical tensions, and escalating technology and trade restrictions, a growing number of central banks are turning to diversified reserve assets such as gold, moving away from an overwhelming reliance on dollar-denominated instruments, market analysts said.

The trend is visible in a report released by the European Central Bank earlier this week, which said that gold has overtaken US Treasuries for the top spot in reserve holdings.

According to the report, gold accounted for 27 percent of global central bank reserves at the end of 2025, moving ahead of US Treasuries at 22 percent and the euro at 15 percent.

While this historic shift is partly due to sustained physical buying, the bank highlighted that it was also driven by soaring gold prices. Adjusting for the price effects using 2023 baseline prices, US Treasuries remain the top holding at 26 percent, while gold drops to 16 percent.

Dollar-denominated assets as a whole still make up the biggest chunk of reserves at 42 percent, exceeding gold's share, according to the report.

The current global monetary system remains anchored by sovereign credit, with the dollar still playing a central role given the United States' status as the world's largest economy, said Ming Ming, chief economist at CITIC Securities.

However, in an era marked by rising geopolitical conflicts and technology and trade sanctions, a growing number of central banks are turning to diversified currency reserves, Ming said.

"Going forward, the dollar will still play an important role in the global reserve system, but the importance of diversified reserves, with gold as a key component, will continue to strengthen," he added.

Central banks have been net buyers of gold for years, with annual purchases exceeding 1,000 metric tons from 2022 to 2024. In 2025, they added 863 tons, well above the 2010-2021 average of 473 tons, data from the World Gold Council showed.

In the first quarter of this year, net purchases are estimated at 244 tons, above both the previous quarter and the five-year average, the council said.

"The main purpose of central banks' gold buying is to expand diversified currency reserves and guard against balance-sheet risks caused by fluctuations in any single country's currency," said Ming.

"It's clear that central banks have a long-term orientation in their gold purchases," he added. "Under the impact of de-globalization, major central banks around the world are expected to continue buying gold in the future."

The faster-than-anticipated US debt buildup is accelerating the pace at which major central banks are diversifying away from US Treasury holdings, according to analysts.

Deng Zhijian, senior investment strategist at DBS Bank China, noted that the US' total national debt had surpassed $39 trillion as of the end of May, reaching a level that the White House Office of Management and Budget had not expected until the end of the year.

"The actual debt level arrived seven months earlier than projected. Clearly, the pace of US debt accumulation is accelerating," Deng said. "The faster US debt grows, the more central banks will seek alternatives, not to replace the dollar overnight, but to reduce concentration risk."

The European Central Bank pointed to survey data suggesting that central banks hold gold not just for diversification but as a hedge against geopolitical risk.

Qu Rui, senior deputy director for research and development at Orient Golden Credit Rating International, said that "global central bank gold buying has moved from tactical rebalancing to a long-term strategy." The turning point, she noted, came after the West froze Russian central bank assets in 2022, which "completely exposed the geopolitical risks of sovereign credit assets". Since then, reserve management logic among central banks has pivoted from the traditional priorities of returns and liquidity to safety and de-geopoliticization, she added.