Gold overtakes U.S. Treasuries as the largest foreign reserve asset
5 hours ago
- #Central Banks
- #Gold Prices
- #Geopolitical Risk
- Gold prices reached a milestone, ending 2025 up over 70% and briefly topping $4,500 an ounce, driven by geopolitical risks, U.S. policy uncertainty, and central bank accumulation.
- Central banks, especially in emerging markets, added over 1,100 tonnes of gold in 2025, viewing it as a shield against inflation and asset freezes, with holdings now at 25-27% of global reserves, a historic high.
- Geopolitical tensions, including Middle East conflicts and events in Venezuela, reinforced gold's safe-haven appeal, as it offers no counterparty risk and cannot be frozen under sanctions.
- While the U.S. dollar remains dominant, gold overtaking U.S. Treasuries as a reserve asset highlights a structural shift toward diversification, with prices possibly exceeding $4,800 in 2026.
- The shift implies reduced reliance on dollar assets, influences currency markets and inflation sentiment, and positions gold as a primary wealth preservation tool, with sustained demand expected from central banks aiming for higher gold-to-reserve ratios.