The European Central Bank's latest report on the international status of the euro shows that by the end of 2025, gold's share in global official reserves will rise to 27%, higher than the 22% share of US Treasury bonds. Foreign media believe this change indicates that central banks are adjusting their definition of "safe assets," and reserve allocation is no longer solely focused on US dollar bonds.
Gold's share rose to 27%.
The report shows that gold's share of global official reserves rose from 20% to 27% in one year, while the share of US Treasury bonds fell from 25% to 22% during the same period. Although dollar-denominated assets still account for about 42% of global reserves and euros for about 15% to 16%, gold has surpassed US Treasury bonds within the reserve portfolio.
This does not mean that central banks are rapidly abandoning the dollar. A more direct change is that central banks are beginning to reduce their reliance on single sovereign credit assets and place more weight on assets that are not dependent on the fiscal credit and payment systems of other countries.
Price increases coexist with continued share purchases.
The increased proportion of gold reserves is partly due to a revaluation of existing reserves caused by rising gold prices. As gold prices rise, the book value of central bank gold reserves also increases.
However, foreign media pointed out that this is not solely due to valuation factors. Over the past few years, central banks have consistently increased their gold holdings, indicating that gold has returned to a more central position in their reserve portfolios, moving away from being a secondary asset.
Geopolitical differentiation becomes the main driving force
The article cites statistics from Incrementum AG based on LSEG data, stating that since the US suspended the convertibility of the dollar with gold in 1971, major currencies have depreciated significantly against gold. Specifically, the dollar has depreciated by approximately 99.24% in gold terms, the pound by approximately 99.57%, and assuming the euro existed during the same period, the decline would be approximately 99.08%.
The article argues that this data does not negate the role of fiat currency and the bond market. Modern economies still require a well-liquid monetary system, bond markets, and central bank policy tools. However, when market concerns rise regarding debt sustainability, fiat currency credibility, or geopolitical situations, gold often re-emerges as a central focus of reserve discussions.
Unlike bonds and bank deposits, gold does not represent any issuer's liabilities. U.S. Treasury bonds rely on the credit of the U.S. government, and bank deposits rely on the banking system, while gold itself is not embedded in such credit chains. The article argues that this characteristic is becoming increasingly important against the backdrop of rising sanctions risks, reliance on payment systems, and sovereign security considerations.
Interest rates are no longer the only variable
The article recalls that after the United States suppressed inflation through high real interest rates in the 1980s, dollar bonds regained their attractiveness, leading to a return of reserve funds to the US fixed-income market.
However, the current environment is different from that of the past. Foreign media believe that the factors driving gold prices higher now are not just inflation, but more importantly, geopolitical divisions. If central banks are concerned about yields, high interest rates may attract funds back to bonds; if they are concerned about sovereign risk, sanctions, and dependence on financial infrastructure, gold provides another kind of protection.
Data from the European Central Bank also shows that dollar assets remain the core of the global reserve system. However, gold surpassing US Treasury bonds signifies a shift in the priorities of global central banks in reserve management, with a focus no longer solely on yields but also on the asset's ability to maintain independence in a more fragmented international environment.
