• Gold overtook the euro to become the world’s second-largest reserve asset, behind only the U.S. dollar—marking a major shift in global reserve composition.
• As of end‑2024, gold constituted around 20 % of total global reserves, compared with the euro’s 16 %, and the dollar’s 46 %.

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🛠 Why it matters

• Record gold purchases: Central banks bought over 1,000 tonnes of gold annually for each of the past three years—the highest since the Bretton Woods period .
• Growing appeal of gold: Seen as a hedge against geopolitical risks, inflation, real‑yield uncertainty, and as a “safe asset” not tied to any one nation.
• Dollar weakening: The dollar has declined (about 10 % lower vs. other currencies YTD), prompting dollar‑averse strategies by reserve managers .

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📈 Supporting stats

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🧭 Reasons behind the shift

1. Diversification: Central banks seek to reduce reliance on currencies like the euro and dollar.
2. Geopolitical hedge: Especially for nations at risk of sanctions (e.g., Russia, China, Turkey).
3. Safe-haven status: During crises, gold holds value and has no counterparty or default risk.
4. Inflation and yield protection: Although gold traditionally hedges inflation, post‑2022 its role expanded to include political and systemic risk protection.

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🧠 What’s next?

• Continued demand: A World Gold Council survey found 95 % of central banks expect to increase gold reserves in the next year—the highest rate since 2018.
• Euro’s decline may persist, while the dollar likely remains dominant, albeit at reduced levels.
• Options like storage and logistics costs and price volatility remain constraints, though many deem gold worth the trade-offs.

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📝 Summary

• Event: Gold surpassed the euro to become the second-largest global reserve asset.
• Reserve shares: Dollar ~46 %, Gold ~20 %, Euro ~16 %.
• Drivers: Central banks’ diversification, geopolitical risk, inflation hedging, and safe-haven demand.
• Implications: Signals a shift in reserve management strategies and growing confidence in gold as a strategic asset among central banks.