Gold overtakes US Treasury as world’s top reserve asset — due to relentless buying by central banks – Firstpost

Gold has overtaken US Treasuries to become the world’s top reserve asset, signalling a major shift in the global financial landscape as central banks continue to increase their holdings of the precious metal amid geopolitical uncertainty, according to a new report by the European Central Bank (ECB).

The ECB, in its June 2026 report titled ‘The International Role of the Euro,’ said the share of gold in total official reserves—comprising both foreign exchange and gold holdings—climbed to 27 per cent by the end of 2025. This pushed gold ahead of US Treasuries, which accounted for 22 per cent of official reserves, and the euro, which stood at 15 per cent.

However, the ECB noted that the rise in gold’s share was largely driven by valuation effects, as bullion prices surged sharply over the past two years. According to the report, gold prices jumped around 60 per cent in 2025 after rising nearly 30% in 2024, mechanically increasing the value of existing gold holdings.

“Central bank gold purchases slowed in 2025, partly reflecting historically high gold prices and strong private investor demand, but remained elevated,” the ECB said in the report.

The central bank said official sector purchases stood at around 850 tonnes in 2025, down from more than 1,000 tonnes annually between 2022 and 2024, but remained well above historical levels.

According to the ECB, the continued accumulation of gold reflects efforts by several central banks to strengthen their balance sheets and protect reserves against rising geopolitical risks.

The report highlighted that since Russia’s full-scale invasion of Ukraine in 2022, China has purchased over 350 tonnes of gold, followed by Poland with 320 tonnes, Türkiye with 220 tonnes and India with around 130 tonnes.

Poland emerged as the largest official sector buyer in 2025, adding nearly 100 tonnes of gold, followed by Kazakhstan, Brazil, China and Türkiye, the ECB said.

The report comes at a time when geopolitical tensions, sanctions risks and concerns over financial fragmentation have pushed several economies to rethink their dependence on traditional reserve assets.

Despite gold’s rising role, the ECB cautioned that the precious metal has limitations compared with major reserve currencies. It said gold does not generate interest income, remains volatile, involves storage costs when held physically, and its supply cannot expand quickly to meet global liquidity demand.

The ECB also noted that the US dollar continues to dominate the international monetary system, holding around 57 per cent of global foreign exchange reserves in 2025, while the euro remained the second-most important currency with a share of nearly 20 per cent.

The growing importance of gold, however, underlines how central banks are reshaping reserve strategies as geopolitical risks increasingly influence global finance.