Gold has surpassed the euro to become the second-largest global reserve asset this year, driven by accelerated accumulation by central banks worldwide, according to a recent report published by the European Central Bank (ECB).
The report, released Wednesday, states that bullion accounted for approximately 20 percent of official global reserves at the end of 2024, edging past the euro’s share of around 16 percent. Meanwhile, the euro’s overall role in global foreign exchange reserves remained steady, maintaining a 20 percent share in 2024.
Central banks’ holdings of gold climbed to nearly 36,000 tons—approaching the historical peak of 38,000 tons recorded in 1965, the ECB noted. This surge reflects ongoing demand, with central banks adding over 1,000 tons of gold to their reserves during 2024 alone. The trend accelerated in 2022 following the outbreak of the Ukraine conflict and has continued robustly since.
The report highlights diversification and geopolitical risk hedging as the primary drivers behind central banks’ increased gold purchases, based on a survey cited within the document.
The rise of gold as a reserve asset coincided with a decline in the U.S. dollar’s share as the dominant reserve currency. In 2024, the dollar’s share fell to 57.8 percent—the lowest level since 1994. Market uncertainties surrounding U.S. trade policies have also contributed to doubts about the dollar’s long-term dominance.
“The dollar has weakened even as Treasury yields have risen, amid market concerns over U.S. tariff policies,” the Stanford Graduate School of Business noted in a recent report. “This surprising disconnect suggests that international investors are losing confidence in the safety of dollar-denominated assets, and the dollar itself.”
The ECB report further emphasizes “highly unusual cross-asset correlations” caused by U.S. tariff policies, presenting an opportunity to bolster the euro’s global standing.
“In the history of the international monetary system, there are moments when the foundations that once seemed unshakeable begin to shift,” ECB President Christine Lagarde said in a speech in Berlin late May. She urged European nations to seize this moment to “defend and uphold global confidence” in the euro.
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