Gold Overtakes Euro as Central Banks’ Second-Largest Reserve

The European Central Bank (ECB) confirmed in its June 2025 report that gold surpassed the euro to become the second-largest global reserve asset by the end of 2024. Gold accounted for about 20% of worldwide official reserves, overtaking the euro’s 16%.

The US dollar remains the largest, with a 46% share. This shift reflects a fundamental change in how central banks manage their assets in response to rising geopolitical and economic risks.

Central banks bought more than 1,000 tonnes of gold for three consecutive years, doubling the average annual purchases from the previous decade. This buying spree pushed global central bank gold holdings to nearly 36,000 tonnes, a level last seen in the 1960s during the Bretton Woods era.

The price of gold surged by 30% in 2024 and reached a record high of $3,500 per ounce in April 2025. The value of global gold reserves increased by around €460 billion in 2024 alone.

India, China, Turkey, and Poland led the purchases. For example, Poland added nearly 90 tonnes in 2024, while China’s central bank increased its gold reserves for most of the year. Turkey was the largest buyer in the first half of 2024.

These actions reflect a broader trend among countries to diversify away from the US dollar and euro, especially after the freezing of Russian reserves in 2022 and ongoing global trade tensions.

Surveys of central banks show that concerns about sanctions, changes in the global monetary system, and the desire for independence from the dollar drive this demand.

Central Banks Turn to Gold Amid Rising Political Risk

Gold’s appeal lies in its ability to provide security without reliance on any single country or financial system. The ECB noted that the traditional relationship between gold and bond yields broke down in 2022, as political risk replaced inflation as the main reason for holding gold.

This trend matters because it signals a loss of confidence in the traditional reserve currencies and a search for assets that offer stability in uncertain times. The move to gold by central banks could reshape global finance by reducing the dominance of the dollar and euro.

It may also increase the importance of physical assets and make financial markets more sensitive to political risk. The ECB and World Gold Council data confirm that this is a structural shift, not a short-term reaction.