Summary:
In a historic shift, global central banks now hold more gold reserves than US Treasuries, marking the first such occurrence since 1996. Gold has emerged as the second-largest reserve asset after the US dollar, reflecting changing macroeconomic and geopolitical realities.
Gold Surpasses US Treasuries in Reserve Portfolios
- As of May 2025, central bank gold reserves stand at 36,344 tonnes, overtaking their combined holdings of US Treasuries.
- Gold now accounts for 20% of global foreign exchange reserves, compared to:
- US Dollar: 46%
- Euro: 16%
- The shift highlights rising concerns over the long-term value of the US dollar and the growing US debt burden.
Unprecedented Surge in Gold Buying
- According to the World Gold Council (WGC):
- 2022: 1,082 tonnes purchased
- 2023: 1,037 tonnes purchased
- 2024: 1,180 tonnes purchased (record high)
- This buying spree sharply contrasts with the 400–500 tonnes annual average recorded in the prior decade.
- Metals Focus projects central banks will still purchase around 1,000 tonnes in 2025, despite being 8% lower than 2024 levels.
Why Gold? Safe-Haven Appeal Strengthens
- Economic uncertainties, high US debt, and weakening confidence in fiat currencies are driving central banks toward gold.
- The IMF notes that while the US dollar remains dominant, its share is gradually declining.
- For both emerging economies and advanced nations, gold is seen as a reliable store of value and a hedge against systemic risks.
Recent Trends and Outlook
- Central banks bought 244 tonnes in Q1 2025 and 166 tonnes in Q2 2025, reflecting a temporary slowdown.
- However, WGC’s 2025 Central Bank Gold Reserves Survey reveals:
- 43% of central banks plan to increase gold holdings in the next 12 months.
- This suggests that the structural shift toward gold is far from over, with demand likely to remain elevated.
Disclaimer:
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