Gold tops US Treasuries as central bank reserve

For the first time in almost 30 years, central banks worldwide are hoarding gold reserves worth more than the classic foreign currency reserve US Treasury Bonds. Currently, 27 percent of total central bank reserves consist of gold bars – the highest level since 1996. In contrast, the share of the globally popular US Treasuries has dropped to below 25 percent. This means that, in view of the current geopolitical world market situation, central banks consider the precious metal to be safer than the tried-and-tested US Treasuries, which, unlike gold, ultimately offer a secure return.

Why US Treasury Bonds are so popular with central banks

There are good reasons why central banks around the world hold a high proportion of US Treasuries in their foreign currency reserves. Importantly, this is due to the high reliability of these bonds, which offer relatively sound interest rates. Another straightforward reason is the high volume, enabling highly liquid trading in these securities at all times. No country has ever issued as many government bonds as the US. At the end of 2024, around 40 percent of all government bonds in circulation came from the land of opportunities. The shift in the importance of these bonds in central banks’ reserve portfolios could indicate a certain loss of confidence in US solvency. This assumption is also supported by the downgrading of the credit rating of US government bonds from AAA to Aa1 by all three major rating agencies.

Gold appreciates 35 percent in 2025

Even though the central banks’ buying spree for gold has slowed down this year, global gold reserves now stand at around 36,200 tonnes. The sharp rise in the gold price has increased the value of these reserves and thus their share of total foreign currency reserves by an additional 35 percent in the US and – due to the weak US dollar – by 21 percent in the Eurozone this year alone. Market experts such as Otavio Costa, macro strategist at Crescat Capital, believe that gold reserves could rise to 50 percent of total reserves, as was the case in the 1970s.