Gold has officially overtaken U.S. Treasuries as the world's largest central bank reserve asset, accounting for roughly 27% of global official reserves, according to a report by European Central Bank. The share of gold now surpasses both that of the euro (15%) and US Treasuries (22%). However, this development largely reflects valuation effects, it noted. In nominal terms, the gold price surged by around 60% and 30% in 2025 and 2024 respectively, which mechanically increases the share of gold in total official foreign reserves. Correcting for such valuation effects by using the gold price at the end of 2023, the share of the euro (16%) remains at par with the share of gold (16%), while the share of US Treasuries continues to be markedly higher (26%), ECB further noted.

Going forward, the report stated that gold faces limitations as an official reserve asset compared with the major fiat currencies: its price is volatile, it is not remunerated and, when held in physical form, it is costly to store. More importantly, the supply of gold is not fully elastic and does not adjust seamlessly to shifts in international demand for liquidity. However, gold purchases may also reflect efforts by some central banks to strengthen balance sheet resilience amid rising geopolitical risks. Survey data suggest that central banks hold gold not only for diversification but also as a hedge against geopolitical risk.

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