Gold has overtaken U.S. Treasurys to become the world’s largest reserve asset held by central banks, marking the first time in nearly three decades that bullion has claimed the top position. The shift reflects a combination of surging gold prices, growing skepticism toward U.S. government debt and accelerating de-dollarization trends.
According to the World Gold Council, the total value of gold held by central banks worldwide has climbed to nearly $4 trillion. By comparison, central banks’ holdings of U.S. Treasurys are estimated at about $3.9 trillion. It is the first time since 1996 that the aggregate value of official gold reserves has exceeded that of U.S. government bonds.
The realignment has been amplified by a sharp rally in gold prices. Gold rose nearly 70% last year and gained an additional 3.6% in the first week of this month. Prices briefly touched $4,500 an ounce on Jan. 7, underscoring heightened demand for safe-haven assets amid geopolitical tensions and financial uncertainty.
At the same time, confidence in U.S. Treasurys has weakened. America’s national debt has climbed to record levels, intensifying concerns about long-term fiscal sustainability. Repeated political standoffs over the federal debt ceiling have further eroded Treasurys’ appeal as the world’s preeminent risk-free asset, analysts say.
China, once among the largest foreign holders of U.S. government debt, has played a central role in the shift. Amid prolonged tensions with Washington, Beijing has steadily reduced its Treasury holdings while continuing to purchase gold for more than ten consecutive months, reinforcing broader efforts to reduce reliance on the U.S. dollar.
The trend is widely viewed as part of a broader de-dollarization strategy among emerging markets and some advanced economies. As doubts grow over the dollar’s long-term role as the dominant reserve currency, central banks are increasingly diversifying their reserve portfolios to strengthen financial sovereignty and limit exposure to U.S. monetary policy.
JPMorgan has warned that political instability in the U.S. could undermine the dollar’s central role in the global financial system. “America’s increasingly fragile political environment risks weakening the foundations of the dollar-centric global economy,” the bank said, adding that de-dollarization could ultimately erode the U.S.’s standing as the issuer of the world’s safest assets.
Despite the global shift, gold still plays a relatively limited role in some countries’ reserves. South Korea’s central bank held about $4.79 billion in gold as of November, accounting for just 1.1% of its total foreign-exchange reserves of roughly $430.7 billion. Holdings of securities, including U.S. Treasurys, totaled approximately $378.4 billion, highlighting the continued dominance of dollar-denominated assets in Seoul’s reserve structure.
Whether gold’s rise marks a lasting structural realignment or a cyclical response to extraordinary geopolitical and fiscal pressures remains uncertain. For now, bullion has reclaimed a level of prominence not seen in decades, signaling a notable shift in how central banks assess safety, stability and trust in the global financial system.
