Central banks are increasingly favouring gold over US Treasuries as their primary reserve asset, highlighting a strategic shift driven by geopolitical tensions and risk reassessment in volatile global markets.
Central banks have made a striking turn towards gold, with the metal overtaking U.S. Treasuries as the largest reserve asset for the first time in decades, according to reporting based on European Central Bank data. By the end of 2025, gold accounted for 27% of global official foreign reserves, while U.S. Treasuries stood at 22%, a shift that underlines how sharply official buyers are reassessing risk in a more volatile world.
The move comes as geopolitical strains have pushed safety and liquidity back to the top of reserve managers’ priorities. The European Central Bank said the change reflects gold’s enduring appeal as a store of value during periods of crisis, while reports from Kitco, the South China Morning Post and other outlets point to sustained central bank buying as a major force behind the shift. China has been highlighted as one of the largest purchasers, reinforcing a broader trend away from dollar-linked assets.
That reversal also carries symbolic weight. For much of the post-war era, U.S. Treasuries were the default reserve asset for central banks seeking security and deep liquidity. Gold’s renewed lead suggests that confidence in those assumptions has weakened, at least at the margin, as officials look for assets less exposed to sanctions risk, inflation surprises and political friction. The Financial Express reported that gold’s value has nearly doubled in two years, adding momentum to official-sector demand.
For markets, the implications are clear: investors are watching whether the reserve shift continues and whether it feeds further strength in bullion prices into the end of 2026. Crypto Briefing noted that prediction markets are already pricing in higher gold levels, while the Federal Reserve’s next moves on interest rates and inflation data may also shape the metal’s direction. If tensions in the Middle East persist and central banks keep adding to their holdings, gold could remain at the centre of the reserve debate.
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