Gold surpasses US Treasuries: Historic shift in global reserves

Gold has undergone a significant strategic shift in its place within the global financial system, competing strongly with US Treasuries to become the largest reserve asset held by foreign governments, backed by a historic jump in gold prices in 2025 and an unprecedented wave of buying by global financial institutions.

What are the details of this strategic shift

Gold reserves are approaching $4 trillion

According to recent data from the World Gold Council, official gold holdings by foreign governments exceeded 900 million troy ounces as of the end of November, based on data from the International Monetary Fund.

Including gold prices at the end of November, the total value of those reserves amounted to about $3.82 trillion, compared to about $3.88 trillion in long- and short-term U.S. Treasuries held by foreign governments as of October.

Gold now accounts for nearly 27% of total global central bank reserves, surpassing the 23% share of U.S. Treasuries, making it the second-largest reserve asset just behind the U.S. dollar.

The advance is fueled by the gold price rising more than 66% in one year, in one of the strongest years for the precious metal since 1979.

Why do central banks favor gold?

This shift is not just due to temporary price factors, but to deep structural reasons that are changing the global financial landscape:

• Loss of confidence in fiat currencies: There is growing concern over monetary easing policies and large fiscal deficits in the U.S., undermining long-term confidence in the value of the U.S. dollar and dollar-denominated assets.
• A desire to minimize geopolitical risk: The freezing of Russia's foreign currency reserves after the invasion of Ukraine has alerted many countries to the dangers of over-reliance on the Western financial system, pushing them towards 'neutral' assets such as gold that are difficult to confiscate or freeze.
• Hedging against inflation and debt: With an ongoing inflationary environment and US public debt levels spiraling to more than $38.5 trillion, reserve managers are looking for a safe haven that preserves value over the long term.
• Shift towards a multipolar financial system: Trade and geopolitical tensions are accelerating the trend for central banks, especially in emerging economies, to diversify their reserves away from a unilateral focus on the dollar, as part of the so-called 'multipolarization' of the global financial system.

Implications and expectations: What is the future of gold and the financial system?

This historic shift has several expectations and potential implications:

- Gold price forecast for 2026:

A number of major financial institutions expect the uptrend in gold prices to continue, with JP Morgan and UBS predicting a price of $5,000 per ounce on or before the end of 2026, and Goldman Sachs predicting a price of $4,900.

- Institutional demand continues:

Central banks are expected to continue buying gold at record levels, with some analysts predicting 755 tons in 2026, which will provide key support for prices.

- Strengthening gold's position as a strategic asset:

No longer seen as a temporary safe haven, gold has become a core asset in the long-term portfolios of countries and investors alike, as evidenced by the surge in gold-backed ETF inflows.

In the end, gold's surpassing of US Treasuries is a pivotal turning point, signaling that the global financial system is entering a new phase of restructuring, reflecting a collective effort by countries to become more financially independent and hedge against uncertainty.

While gold is not expected to return to the dominance it had in the 1970s (when it accounted for 75% of reserves), its enhanced role as an "anchor of stability" in reserve portfolios seems to be a permanent feature of the economic landscape.