Gold Surpasses Euro as Second Most Important Reserve Asset Globally, Says ECB
Waleed Farouk
Recent data released by the European Central Bank (ECB) reveals that gold has overtaken the euro to become the second most important global reserve asset among central banks, driven by record-breaking purchases and sustained price surges.
According to the report, gold accounted for approximately 20% of total official global reserves in 2024, surpassing the euro's share of 16%. The U.S. dollar maintained its lead with a dominant 46% share.
The ECB noted that central banks continued to acquire gold at an unprecedented pace for the third consecutive year, with total purchases exceeding 1,000 tonnes in 2024. This volume represents about one-fifth of the world's annual gold production and is double the average annual purchases recorded over the past decade.
Central bank gold holdings are now nearing historic highs not seen since the Bretton Woods era following World War II, when the U.S. dollar was convertible to gold at a fixed rate. At that time, global gold reserves peaked at around 38,000 tonnes in the mid-1960s. In comparison, reserves stood at approximately 36,000 tonnes in 2024.
India, China, Turkey, and Poland were among the largest gold buyers last year, according to the World Gold Council.
A 30% increase in gold prices during 2024, followed by a further 27% rise since the beginning of 2025—pushing prices to a record high of $3,500 per ounce—has also contributed to gold's growing share in global reserves.
"The substantial volume of gold holdings, coupled with soaring prices, has elevated gold to the position of the second most valuable reserve asset globally, trailing only the U.S. dollar," the ECB said.
Despite offering no yield and incurring storage costs, gold remains a highly liquid and secure asset. It is immune to counterparty risks and international sanctions, making it particularly attractive in times of global uncertainty.
The report highlighted that the trend toward reducing reliance on the U.S. dollar has intensified since Russia's invasion of Ukraine in 2022 and the subsequent wave of Western financial sanctions. In response, many nations—especially developing economies and those with close geopolitical ties to China and Russia—have boosted their gold reserves as a safeguard against potential sanctions.
An ECB analysis found that in five of the ten largest annual increases in gold's share of reserves since 1999, the countries involved had faced sanctions in that year or the previous one.
A survey of 57 central banks holding gold indicated that concerns over sanctions, shifts in the global monetary order, and the desire to reduce dollar dependency were key motivations for increased gold purchases, particularly among emerging and developing economies.
The ECB concluded that the traditional inverse relationship between gold prices and real yields on other assets has broken down since 2022. Gold is increasingly viewed not just as a hedge against inflation but also as a strategic buffer against geopolitical risk.
In closing, the ECB noted that previous gold price booms were typically accompanied by increased supply. If official sector demand remains strong, it could incentivize higher global gold production in the coming years.
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