Gold’s share in global reserves hits 30-year high amid weakening dollar
Gold’s dominance in global reserves is strengthening as central banks turn to the yellow metal amid historic demand and rising global uncertainty. In the first quarter of 2025, gold’s share of international reserves rose by 3 percentage points to 24 percent, which is its highest level in three decades, following the third straight year of gains.
Gold’s share in global international reserves has now surpassed the Euro since 2024, making it the world’s second-largest reserve asset. In contrast, the U.S. Dollar’s share has slipped by about 2 percentage points to 42 percent, which is the lowest since the mid-1990s, while the Euro’s share was roughly around 15 percent.
The rise in holdings comes due to two key reasons: first, the price of gold has been soaring, thus increasing the value of current holdings of the precious metal; second, amid a volatile geopolitical landscape, central banks continue to accumulate gold given its safe-haven demand.
Going ahead, nearly all central banks expect their reserves to rise. Interestingly, the WGC noted that the majority of central banks see moderate or significantly lower U.S. dollar holdings within global reserves over the next five years. Respondents also believe that the share of other currencies, such as the euro and renminbi, as well as gold, will increase over the same period.
While the U.S. Dollar does hold the dominant position currently, making up almost half the reserves, central banks are of the opinion that protectionist measures such as tariffs could incentivise central banks to diversify their reserve holdings. Further, the falling dollar has indicated waning confidence in the world’s premier reserve currency.
However, despite the move towards gold and other currencies, the dollar's role remains underpinned by deep and liquid financial markets, strong legal institutions, and the lack of a full substitute currency with comparable characteristics. “Therefore, although a decline in its share is plausible, it is likely to be gradual and modest,” noted a central bank respondent to the WGC.
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