ECB Reveals Gold Has Surpassed Euro as Second-Largest Reserve Asset

In a newly released report, the European Central Bank (ECB) has acknowledged a notable shift in global reserve asset preferences, confirming that gold has overtaken the euro to become the second most-held reserve asset by central banks. This change is largely driven by a surge in demand for gold among monetary authorities.

The ECB’s data shows that gold now accounts for 19.6% of global central bank reserves, outpacing the euro, which holds a 15.9% share. Despite this development, the euro’s reserve share has remained relatively stable, showing little movement since 2016.

The biggest loser in this reshuffling is the U.S. dollar, which, although still dominant, has seen its share fall significantly—from over 60% to 46.5%. The report attributes this decline to a growing trend among central banks to prioritize more stable and reliable assets, describing the move as a global “rush to quality.”

ECB Highlights Key Motivators Behind Gold’s Rise in Central Bank Reserves

According to the European Central Bank (ECB), findings from a World Gold Council survey reveal that central banks are increasingly turning to gold for several strategic reasons. Chief among them are gold’s reputation as a reliable long-term store of value, its role as a hedge against inflation, its strong historical performance during crises, and its effectiveness in diversifying portfolios.

Although the shift isn’t primarily driven by de-dollarization, the ECB report points out that geopolitical tensions play a significant role in reserve allocation decisions. The trend toward gold gained notable momentum following Russia’s full-scale invasion of Ukraine in 2022 and has remained elevated since.

Despite recent signals suggesting that the pace of gold accumulation may be slowing, experts argue the broader global environment will likely sustain the demand. Janet Mui, CFA and head of market analysis at RBC Brewin Dolphin, noted in an interview with CNBC that, “on a long-term basis, the uncertain geopolitical backdrop and desire for diversification will support the accumulation of gold as reserves.”

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