Gold overtakes U.S. Treasurys as world's top central bank reserve asset, ECB says
By: Carl Surran, SA News Editor
Gold has replaced U.S. government bonds as the world's top reserve asset, according to a report published Tuesday by the European Central Bank, following years of buying by central banks and a rally that has seen prices nearly double over the past two years.
Bullion accounted for 27% of all global central bank reserve assets at year-end 2025, up from 20% a year earlier, while U.S. Treasurys slipped to 22% from 25% over the same period, the ECB said.
Gold's surge past the traditional bedrock of international dollar reserve holdings is also the result of the metal's spectacular price gains in recent years, including a record high exceeding $5,500/oz in January.
While gold has achieved a significant milestone, the ECB said it does not expect the trend to be sustainable.
"Going forward, 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," the ECB report said.
"More importantly, the supply of gold is not fully elastic and does not adjust seamlessly to shifts in international demand for liquidity."
Gold futures edged higher for the third time in the past four trading sessions, but the momentum may not continue, as the inflation environment does not support assets like gold.
"The macro environment stays challenging with money markets biased toward a Fed rate hike by the end of the year," ADM Investor Services said, noting that data released by the Bureau of Labor Statistics showed U.S. unemployment at its highest level since May 2024.
Front-month Comex gold (XAUUSD:CUR) for June delivery gained 0.3% to $4,489.10/oz, and front-month Comex June silver (XAGUSD:CUR) added 0.4% to $75.311/oz.
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