Gold Surpasses U.S. Treasuries in FX Reserves as Prices Hit New Record
Gold has officially surpassed U.S. Treasuries as the largest asset in central bank foreign-exchange reserves, marking a historic turning point in the global monetary system for the first time in at least two decades.
Key Takeaways
- Gold has overtaken U.S. Treasuries as the top asset in central bank FX reserves, with holdings valued around $5 trillion.
- Central banks, led by China, continue to buy gold while cutting exposure to U.S. Treasuries.
- Gold prices hit a new all-time high above $5,500 as geopolitical tensions and safe-haven demand intensify.
- Total gold demand in 2025 topped 5,000 tonnes, driven by strong ETF inflows and rising bar and coin purchases.
At current market prices, global official gold holdings have climbed to around $5.0 trillion, overtaking foreign official holdings of U.S. Treasuries, which stand near $3.9 trillion.
The shift has been years in the making. Since late 2019, central bank gold holdings have effectively tripled in value, driven by both aggressive accumulation and a relentless rise in prices. Over that period, central banks are estimated to have added roughly 4,500 tonnes of gold, including unreported purchases, while foreign Treasury holdings have remained broadly flat.
China Leads the Pivot Away From U.S. Debt
China has played a central role in this transition, steadily stockpiling gold while reducing exposure to U.S. Treasuries. Beijing’s strategy reflects a broader effort to diversify reserves away from dollar-denominated assets amid rising geopolitical fragmentation, trade tensions, and concerns about long-term U.S. fiscal stability. Other emerging-market central banks have followed a similar path, reinforcing gold’s renewed role as a neutral reserve asset.
Gold’s dominance has been amplified by an extraordinary price rally. Bullion recently surged to a new all-time high above $5,500 per ounce, extending a historic run that has reshaped reserve portfolios globally. In 2025 alone, gold set 53 new record highs, underlining the intensity and persistence of demand.
Geopolitical Stress Fuels Safe-Haven Demand
Escalating tensions in the Middle East have added further fuel to gold’s rally. Rising friction involving Iran, alongside the risk of potential U.S. military intervention, has weighed heavily on global markets and boosted demand for safe-haven assets. With geopolitical risk premiums rising and investors reassessing exposure to traditional financial assets, gold has emerged as a primary beneficiary.
This backdrop has pushed total gold demand in 2025, including over-the-counter transactions, above 5,000 tonnes for the first time on record. Combined with the surge in prices, total gold demand reached an unprecedented value of $555 billion, up 45% year over year.
Investment Demand Accelerates Sharply
Investment flows have been a major driver of this expansion. Global gold ETF holdings increased by 801 tonnes in 2025, marking the second-strongest year on record. At the same time, bar and coin purchases jumped to their highest level in 12 years, signaling strong participation from both institutional and retail investors.
Together, these trends highlight a profound reallocation of capital underway. As confidence in traditional reserve assets weakens and geopolitical risks intensify, gold is no longer just a hedge – it is increasingly redefining the architecture of the global monetary system.
At the time of writing, spot gold is trading around $5,300 after losing around $3 trillion from its market cap.
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Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.
