According to a report released today by the European Central Bank (ECB), for the first time ever, global central banks now hold more gold in their reserves than US government bonds and Treasury securities. The ECB report highlights that by the end of 2025, gold’s share in central bank reserves will reach 27 percent, up from 20 percent just a year ago.
Shift in reserve allocations draws attention
During the same period, the proportion of US bonds and Treasury securities in global reserves dropped from 25 percent to 22 percent, while assets denominated in euros remained steady at 15 percent. The ECB, in its analysis of the euro’s international role, underscores a clear change in reserve management trends. As the monetary authority for the euro area, the ECB closely follows these global reserve dynamics.
The ECB’s review found a significant pivot by central banks from US debt instruments to gold as a preferred store of value. Over years, US government bonds had been seen as the primary reserve asset, but recent developments are challenging this longstanding norm.
Geopolitics drive demand for gold
The report attributes this change to geopolitical tensions, concerns over the risk of sanctions, and the desire by some countries to reduce their reliance on dollar-denominated assets. As global uncertainty rises, central banks are increasingly viewing gold as a safer hedge.
ECB President Christine Lagarde notes that ongoing geopolitical tensions are fueling strong demand for gold among central banks.
Sanctions accelerate reassessment
According to the ECB report, after Russia’s invasion of Ukraine in 2022 and subsequent freezing of Russia’s dollar-based reserves by the US and its allies, numerous countries began to rethink their reserve strategies. Governments started to scrutinize how much of their national assets were parked in instruments potentially subject to US controls.
Gold’s appeal has been rising in this environment, as it is seen as an asset that cannot be frozen by foreign governments. The report stresses that this characteristic has made gold more attractive to central banks, especially since the events of 2022.
The ECB finds the shift in reserves has moved more toward gold rather than competing currencies.
No sudden drop in dollar demand expected
Nevertheless, the ECB notes there are no clear signs of a sharp, short-term decline in demand for US government bonds. US debt instruments still account for more than a fifth of global foreign exchange reserves, and the dollar continues to dominate international trade and finance.
At the same time, the unchanged share of the euro in global reserves suggests that central banks are mainly directing their new reserve purchases toward gold, rather than other major currencies. This development indicates a greater priority on physical stores of value in reserve diversification.
Biggest buyers take the stage
The report identifies China, India, Turkey, and Poland as the most active central banks in gold accumulation in recent years. The data also show that government gold purchases have continued to rise since 2022.
