ECB: Gold's share in central bank reserves to surpass US Treasuries by end-2025
Quick Look
- The ECB reports that gold's share in central bank foreign reserves will exceed US Treasuries by end-2025, marking a significant shift after nearly 30 years.
- This trend is driven by emerging economies like China and India increasing gold purchases amid rising geopolitical risks.
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Why It Matters
Central banks have historically relied on US Treasuries for their foreign reserves due to their safety and liquidity. However, recent trends show a decline in the share of dollar-denominated assets.
BRUSSELS (Jiji Press) -- The European Central Bank (ECB) revealed in a report released on the 2nd that the proportion of gold in the foreign reserves of central banks worldwide is expected to reach 27% by the end of 2025, surpassing the 22% share of US Treasury bonds. According to Reuters, this marks the first time in about 30 years, since 1996, that the ratio of gold will overtake that of US Treasuries. The purchase of gold has been expanding, primarily among emerging countries such as China and India, against the backdrop of rising geopolitical risks.
Gold Boom, New Investments Increase, Trading Near Record Highs, Dollar Diversification Boosts Trend
Until now, central banks have made US Treasury bonds and other dollar-denominated assets the core of their foreign reserves, owing to their high safety and liquidity. While the share of dollar-denominated assets still accounts for about 40%, it has been on a declining trend in recent years. Some view the uncertainty surrounding the policy management of the Trump administration as a factor leading to moves to curb concentration in US assets.
Open Questions
- What specific geopolitical events are most influencing this shift?
- Will this trend continue beyond 2025?
- What are the long-term implications for the US dollar's global reserve status?
- Are there specific policy changes in the US that are contributing to this diversification?
