Global Central Banks Boost Gold Reserves as the Dollar Weakens and the Euro Slips
In recent years, global central banks have increasingly moved to restructure their foreign reserve holdings, driven by mounting geopolitical uncertainty and global economic volatility. Gold has emerged as the second-largest component of international reserves, overtaking the euro, while the U.S. dollar’s share continues its gradual decline.
This accelerating transformation reflects policymakers’ growing awareness of the risks associated with excessive exposure to the dollar—especially as it becomes more frequently used as a tool of political and economic leverage—alongside the recent depreciation of the U.S. currency and rising inflationary pressures in developing economies.
Global Trends
Gold surpassed the euro in 2024 to become the second-largest reserve asset held by central banks worldwide, accounting for 20% of total reserves, compared to 16% for the euro, while the U.S. dollar’s share fell to around 46%. This shift underscores the growing trust in gold as a safe-haven asset and hedge against global political and economic volatility, in contrast to the waning appeal of traditional reserve currencies.
Central bank purchases of gold have surged, exceeding 1,000 tons annually over the past three years—equivalent to roughly one-fifth of global gold production each year. This level of buying is twice the average recorded during the first decade of the 21st century, when central banks purchased between 400 and 500 tons per year.
Since the onset of the Russia–Ukraine war, central bank gold purchases have spiked, reaching 1,086 tons in 2024, up 3.34% year-on-year. In mid-2025, global central banks set new monthly records, adding 10 tons in July and 15 tons in August, according to the World Gold Council. Notable buyers included Azerbaijan, Kazakhstan, Turkey, China, and the Czech Republic.
Examining the global gold reserves map reveals the United States as the clear leader, holding 8,133 tons of gold as of September 2025—the world’s largest official stockpile—representing 77.9% of its total official reserves, followed by Germany, Italy, and France.
Meanwhile, China and Russia have significantly raised the share of gold in their reserves since the outbreak of the Ukraine war: from 3.1% to 6.8% in China and from 21.7% to 37.1% in Russia. This sharp increase signals a strategic diversification away from U.S. dollar dependency by both Beijing and Moscow.
Underlying Motivations
Emerging and developing economies—particularly after the Ukraine conflict—have recognized the urgent need to reshape the global monetary system toward greater diversity and multipolarity, moving away from dependence on a single dominant currency. This trend has gained powerful international momentum, prompting many countries to diversify their foreign reserve portfolios, reduce dollar exposure, and strengthen their monetary resilience against external shocks.
China has led this movement, motivated by its growing need to limit overreliance on the dollar amid escalating tensions with the United States. Washington’s use of the so-called “weaponization of the dollar”—leveraging its global dominance in trade, finance, and settlements to impose sanctions—has further reinforced the perception of gold as a politically neutral and reliable reserve asset.
According to analyses by the European Central Bank, roughly half of the largest annual increases in official gold reserves since 1999 occurred in countries either subject to international sanctions or politically aligned with China and Russia. This underscores that gold’s appeal extends beyond its financial safety—it also serves as a symbol of monetary sovereignty and a shield against geopolitical pressure.
A survey of 57 central banks holding gold in 2024 revealed that the main motivations behind this strategy were concerns about potential future sanctions and expectations of a restructured global monetary order, in which the U.S. dollar’s dominance is expected to gradually erode.
Moreover, the trade and fiscal policies of U.S. President Donald Trump’s administration have not only disrupted global markets but also weakened the dollar relative to other major currencies, diminishing its historical status as the world’s preferred safe-haven asset. As a result, emerging economies have accelerated efforts to diversify reserves, increasing holdings of gold and alternative currencies such as the Chinese yuan and the euro.
At the same time, developing countries have faced surging inflation and currency depreciation, making gold an increasingly attractive reserve asset for preserving value and protecting economies from hyperinflationary shocks.
Future Outlook
Looking ahead, central banks are expected to sustain their gold-buying momentum in the short term, with annual demand likely to remain around or above 1,000 tons. This continued accumulation will support global efforts to gradually reduce dollar dominance, positioning central banks as a major driver of global gold demand in the coming years.
In a World Gold Council survey conducted between February 25 and May 20, 2025, nearly 95% of respondents expected global central bank gold holdings to rise over the next twelve months—the highest figure since the survey began in 2018. A majority (73%) also predicted that the U.S. dollar’s share of global reserves will moderate or decline within the next five years, giving way to larger roles for the euro and Chinese yuan.
According to Goldman Sachs, this surge in central bank demand is likely to fuel a bullish cycle in gold prices through late 2025. Similarly, Deutsche Bank identified several key factors that will support sustained demand and higher prices, including persistent geopolitical tensions, interest rate cuts by major central banks, and the weakening U.S. dollar.
Conclusion
In sum, global central banks are poised to remain key players in shaping the future of the gold market, both in terms of demand dynamics and price formation. Combined with broader global shifts, this trend will further consolidate gold’s position as a strategic asset for hedging and risk management amid deepening economic and geopolitical transformation.
