Gold has surpassed the euro to become the second-most important reserve asset for central banks, driven by record purchases and a sharp rise in prices, according to a report released Wednesday by the European Central Bank.
In 2024, gold made up 20% of global official reserves, edging out the euro’s 16%. The US dollar remains dominant at 46%. Central banks acquired more than 1,000 tonnes of gold for the third consecutive year—equal to 20% of global annual production and twice the yearly average in the 2010s.
The total stock of gold held by central banks now approaches levels last seen during the Bretton Woods era. Global reserves, which peaked at 38,000 tonnes in the mid-1960s, reached 36,000 tonnes this year. “Central banks worldwide now hold almost as much gold as they did in 1965,” the ECB report noted.
Major buyers in 2023 included China, India, Turkey, and Poland, according to the World Gold Council. A 30% rise in gold prices last year helped boost its share of foreign reserves, and the price has risen another 27% in 2024, recently hitting a record high of $3,500 per troy ounce.
This combination of growing stockpiles and surging prices has pushed gold into second place among reserve assets, behind only the US dollar. Despite offering no interest and carrying storage costs, gold is widely seen as a safe, liquid asset free from counterparty risk and sanctions exposure.
The trend reflects efforts by central banks—especially in emerging and developing countries—to diversify away from the dollar amid concerns about geopolitical tensions and rising US debt. The movement accelerated after Russia’s 2022 invasion of Ukraine, when the US imposed sweeping financial sanctions.
“Gold demand for monetary reserves surged sharply in the wake of Russia’s full-scale invasion of Ukraine in 2022 and has remained high,” the ECB said. The report found that in five of the 10 largest annual increases in gold’s share of reserves since 1999, the countries involved had faced sanctions in the same year or the year before.
Countries aligned geopolitically with China and Russia have been the most aggressive buyers of gold over the past three years. A survey of 57 central banks holding gold showed that concerns about sanctions, expected shifts in the global monetary system, and a desire to reduce dollar dependence were key factors, particularly among emerging markets.
Historically, gold prices tended to fall when real yields on other assets rose. However, since early 2022, that relationship has broken down, with investors increasingly viewing gold as a shield against political risk rather than inflation.
The ECB added that gold supply has historically risen during periods of high prices. If demand from central banks continues to grow, global supply may rise further in response.
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