Gold Surpasses U.S. Treasuries in Global Reserves, but the Dollar Remains Dominant

Gold has strengthened its position within the global financial system after a recent report by the European Central Bank (ECB) revealed that the precious metal surpassed U.S. Treasury securities as a share of official global reserve assets last year.

According to the ECB’s annual report on the international role of the euro, gold accounted for approximately 27% of global official reserves at the end of last year, compared with around 22% for U.S. Treasury securities.

While this development marks a significant milestone, analysts note that it does not signal the end of the U.S. dollar’s dominance or its replacement as the world’s primary reserve currency.

The shift is largely attributed to the sharp rise in gold prices during 2024 and 2025. Gold gained roughly 30% in 2024 and surged by an additional 60% in 2025, substantially increasing the market value of central banks’ gold holdings worldwide.

As a result, the growing share of gold in global reserves reflects not only central bank purchases but also a powerful valuation effect driven by rising prices.

Central banks purchased approximately 850 tonnes of gold last year. Although this figure was lower than the more than 1,000 tonnes acquired annually during 2022, 2023, and 2024, it remained well above the average level of purchases recorded over the previous decade.

The lower volume of purchases therefore does not indicate weakening demand. Instead, it highlights the continued strategic importance of gold, particularly as higher prices significantly increased the overall value of central bank holdings.

Analysts point to several structural factors behind this trend. One of the most important was the freezing of Russian dollar-denominated assets following the outbreak of the Russia–Ukraine conflict, which prompted many countries to reconsider the composition of their foreign exchange reserves and reduce dependence on dollar-based assets.

Persistent geopolitical tensions between the United States and China have also contributed to this shift. China has continued to reduce portions of its holdings of U.S. Treasury securities while simultaneously expanding its gold reserves.

Concerns over rising sovereign debt levels worldwide—especially in the United States, where federal debt continues to reach record highs—have further encouraged central banks to seek assets perceived as politically neutral and free from counterparty risk.

Today, central banks collectively hold roughly 36,000 tonnes of gold. This level is approaching the historic peak of around 38,000 tonnes held during the Bretton Woods era, when the U.S. dollar was formally linked to gold.

While this does not imply a return to the gold standard or a revival of the Bretton Woods system, it demonstrates the renewed strategic role of gold within the international monetary framework.

Regarding the future of the U.S. dollar, analysts emphasize that the current trend represents diversification rather than replacement. The dollar continues to occupy a unique position in global trade, financial markets, and international payment systems.

Although the dollar’s share of global reserves has gradually declined, this reflects efforts by countries to diversify risk rather than an abandonment of the U.S. currency.

Many experts believe the world may be moving toward a more multipolar financial system in the coming years. However, a complete transition to a new monetary order would require far deeper structural changes in the global economy.

Gold is increasingly competing with the dollar as a store of value and a hedge against economic and geopolitical uncertainty. Yet it still lacks the operational characteristics necessary to function as a full reserve currency capable of facilitating global trade and financial transactions.

Ultimately, the rise of gold in official reserves should be viewed not as the end of the dollar era, but as part of a broader rebalancing of global reserve assets. As geopolitical and economic risks continue to grow, gold is regaining a central role in the international financial system, potentially reshaping the reserve landscape for years to come.