Gold Surpasses the Euro as a Global Reserve Asset

Gold is officially back in the spotlight. According to the European Central Bank, gold has now overtaken the euro to become the second most important reserve asset held by central banks — second only to the US dollar.

Central Banks Go All-In on Gold

Last year, gold made up 20% of global official reserves, while the euro dropped to 16%. The dollar still dominates with 46%, but the shift is clear: central banks are betting heavily on gold.

In 2024 alone, central banks purchased over 1,000 tonnes of gold — for the third year in a row. That’s nearly twice the annual average of the 2010s, and about one-fifth of global gold production.

A Comeback to 1960s Levels

Global central bank gold holdings have now reached 36,000 tonnes — just shy of the 38,000-tonne peak from the mid-1960s during the Bretton Woods era, when currencies were pegged to the US dollar and indirectly to gold.

The ECB notes: “Central banks worldwide now hold almost as much gold as they did in 1965.”

Who’s Buying?

Big buyers include India, China, Turkey, and Poland, according to the World Gold Council. Their reasons are clear: gold is liquid, stable, free from counterparty risk — and crucially, immune to sanctions.

Since Russia’s 2022 invasion of Ukraine and the West’s financial retaliation, many countries — especially emerging markets — have been diversifying away from the dollar to avoid the same fate.

Sanctions, Strategy, and a Safe Haven

The ECB notes a clear pattern: in half of the 10 biggest jumps in gold reserves since 1999, the countries involved had been hit with sanctions around the same time.

A survey of 57 central banks also found key motivations behind gold accumulation:

• fear of sanctions,

• expectations of global monetary shifts,

• and a desire to reduce dependency on the dollar.

Why Gold Now?

Gold doesn’t pay interest and costs money to store, yet its value has soared. In 2023, gold prices rose 30%. In 2024, they’re already up another 27%, reaching a record $3,500 per ounce.

Traditionally, gold lost appeal when real yields rose — but that link broke in 2022. Today, political risk, not inflation, is driving demand.

Looking Ahead

The ECB suggests that if demand stays high, we may see increased global gold supply in the future. But one thing is clear: gold is no longer just a legacy asset — it’s a strategic cornerstone in a shifting global landscape.