Gold Overtakes US Treasuries as Central Banks Rebalance Reserve Portfolios
Gold has moved ahead of US Treasuries as a major component of global central bank reserves, marking a significant shift in the composition of official reserve assets amid rising geopolitical risk, high gold prices and continued reserve diversification.
According to the European Central Bank’s June 2026 report on the international role of the euro, gold accounted for 27% of total official foreign reserves at the end of 2025 when both foreign exchange reserves and gold holdings are valued at market prices. This compares with 22% for US Treasuries and 15% for the euro.
The shift is important because US Treasuries have long been considered the backbone of global reserve portfolios. However, the latest data show that gold has become more prominent as central banks place greater emphasis on diversification, balance sheet resilience and protection against geopolitical shocks.
Price Gains Were the Main Driver
The rise in gold’s reserve share was driven mainly by valuation effects rather than purchases alone. Gold prices increased by around 60% in 2025 after rising by about 30% in 2024, significantly lifting the market value of existing central bank holdings.
This distinction matters. When the ECB adjusts for valuation effects by using end-2023 gold prices, gold’s share of official reserves falls to around 16%, broadly equal to the euro, while US Treasuries remain higher at 26%.
In other words, gold’s rise above US Treasuries reflects both strategic reserve diversification and a powerful price effect. Central banks have been buying gold, but the sharp increase in gold prices has amplified the shift in reserve composition.
Central Bank Gold Holdings Near Bretton Woods Era Levels
Central banks now hold more than 36,000 tonnes of gold, approaching the historical peak of around 38,000 tonnes recorded during the Bretton Woods era in the mid-1960s.
Net gold purchases by central banks slowed to around 850 tonnes in 2025, down from more than 1,000 tonnes per year between 2022 and 2024. Even after this moderation, official sector gold demand remained elevated by historical standards and well above pre-2022 levels.
The slowdown in purchases does not necessarily signal weaker interest in gold. Instead, it may reflect the impact of historically high prices and the fact that valuation gains have already increased gold’s weight in reserve portfolios.
Geopolitical Risk Is Supporting Gold Demand
The ECB links the rise in official gold holdings to persistent geopolitical tensions and reserve diversification. Since Russia’s full-scale invasion of Ukraine in 2022, central banks have increasingly viewed gold as a reserve asset with no direct sovereign counterparty risk.
This trend accelerated after Western sanctions froze a large portion of Russia’s foreign reserves. For many reserve managers, the episode highlighted the importance of holding assets that are liquid, internationally accepted and less directly exposed to foreign jurisdictional control.
The ECB notes that survey evidence shows central banks hold gold for diversification and as a hedge against geopolitical risk. This does not mean countries are abandoning major currencies, but it does show that gold is being used more actively as a strategic reserve buffer.
Major Buyers Since 2022
The largest central bank gold buyers since 2022 include China, Poland, Türkiye and India. According to the ECB, China has purchased more than 350 tonnes since 2022, followed by Poland with around 320 tonnes, Türkiye with around 220 tonnes and India with around 130 tonnes.
Poland was the largest official sector buyer in 2025, adding around 100 tonnes. Kazakhstan, Brazil, China and Türkiye were also among the leading official sector purchasers.
The report also highlights the growing relevance of private sector gold demand. Private investment demand reached nearly 2,200 tonnes in 2025, almost double the 2024 level, supported by strong inflows into gold-backed exchange-traded funds. This shows that the rise in gold has not been driven only by central banks, but also by wider investor demand for safe-haven assets.
The Dollar Still Dominates Overall Reserve Holdings
Despite gold’s rise, the US dollar remains central to the international reserve system. Gold has overtaken US Treasuries as an individual reserve asset category at market value, but this should not be interpreted as the end of dollar dominance.
Dollar-denominated assets remain deeply embedded in global reserves, trade invoicing, payments, funding markets and foreign exchange activity. The ECB report also shows that the US dollar continues to dominate global foreign exchange turnover, appearing on one side of almost 90% of over-the-counter foreign exchange transactions.
The more accurate interpretation is that reserve portfolios are becoming more diversified. Central banks are not replacing the dollar overnight, but they are increasing the role of gold and other assets as part of a broader risk management strategy.
Gold’s Strengths and Limitations
Gold offers several advantages for central banks. It has no credit risk, no direct issuer risk and a long history as a store of value. It can also perform well during periods of geopolitical stress, inflation uncertainty or loss of confidence in fiat assets.
However, gold also has limitations. It does not generate interest income, its price can be volatile, physical holdings involve storage and security costs, and supply cannot expand quickly in response to demand. These features mean gold is useful as a reserve diversifier, but it is not a complete substitute for highly liquid government securities or major reserve currencies.
This is why US Treasuries, euro area sovereign bonds and other liquid fixed income assets remain important for reserve managers. They provide yield, collateral value and deep market liquidity that gold cannot fully replicate.
Implications for the International Monetary System
The rise of gold in official reserves reflects a more fragmented and risk-conscious international monetary system. Central banks are adjusting to a world of higher geopolitical uncertainty, sanctions risk, volatile capital flows and questions over the future structure of global payments.
For markets, the shift is significant because persistent official sector demand can provide structural support for gold prices. For policymakers, it signals that trust, legal certainty and financial market depth are becoming even more important in determining the attractiveness of reserve currencies.
For the euro, the picture is mixed. The euro remained stable at around 15% of total official reserves including gold at market prices, while the ECB continues to emphasize the need for deeper capital markets, stronger institutional credibility and a larger pool of safe assets to strengthen the currency’s global role.
Outlook
Gold’s rise above US Treasuries is a major symbolic development, but it should be understood carefully. The shift reflects central bank diversification and geopolitical risk hedging, but also the mechanical impact of a sharp rise in gold prices.
If gold prices remain elevated and geopolitical risks persist, central banks are likely to continue treating gold as an important strategic reserve asset. However, if prices correct, gold’s share of reserves could fall even without major selling by central banks.
The main takeaway is that global reserve management is becoming more diversified and more geopolitically aware. Gold is playing a larger role in official portfolios, while the US dollar remains dominant across the broader reserve and payments system. The shift is not a sudden replacement of the dollar, but it is a clear sign that central banks are building more resilient reserve structures in an increasingly uncertain global environment.
Source note: Analysis based on the European Central Bank’s June 2026 report, The International Role of the Euro, including ECB data on official foreign reserves, gold holdings, US Treasuries, reserve valuation effects and central bank gold purchases.
