Gold Overtakes US Treasuries on Central Bank Balance Sheets

Gold has overtaken the US Treasuries to become the largest reserve asset held by the world's central banks. According to the ECB's report (“The International Role of the Euro”), gold accounted for 27% of global central-bank reserves by the end of 2025, whilst the share of US government debt had fallen to 22%. To compare, the US Treasuries represented 25% of reserves in 2024 against 20% for gold, whilst in 2023 the figures stood at 26% and 16% respectively.

The ECB attributes the increase in gold's share both to sustained central-bank purchases and to the remarkable appreciation in the metal's price. Gold has risen from approximately $1,830 per ounce in 2023 to around $4,500 in 2026. According to Christine Lagarde, persistent geopolitical tensions have provided additional support for demand.

According to the Financial Times, central banks purchased more than 1,000 tons of gold annually between 2022 and 2024, with the largest buyers being China, Poland, Turkey and India. Although dollar-denominated assets still account for roughly 42% of global reserves, the symbolism is striking: for the first time in modern history, gold rather than US government debt has become the principal reserve asset held by central banks.

Meanwhile, the Reserve Bank of India may have sold approximately $12 billion worth of gold during the fortnight leading up to 22 May, whilst simultaneously increasing its foreign-currency reserves by around $7.5 billion, according to estimates reported by Bloomberg.

At first glance, this may appear rather surprising. Central banks have been enthusiastic buyers of gold in recent years, and India has ranked amongst the largest purchasers since 2022. However, the logic seems less about reducing exposure to gold and more about managing liquidity amid the conflict in the Middle East and the associated risks facing foreign-exchange reserves. During periods of heightened regional instability, central banks place considerable value on maintaining sufficiently liquid and flexible assets to support their currencies and preserve financial stability.

What is particularly noteworthy is that the value of the Reserve Bank of India's gold holdings declined despite the continued rise in gold prices. That, in itself, lends weight to the suggestion that a portion of the country's bullion reserves may have been sold. As of the end of March, the Reserve Bank of India held 880.52 tons of gold, with approximately 77% of those reserves stored within India itself.

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